The giant Silicon Valley Bank could invest a quarter of a billion here by 2019

A MAJOR US backer for growing tech companies could pay out up to $250 million to Irish tech startups by 2019.

The Silicon Valley Bank announced yesterday that it will release a second, $100 million tranche of loans to fast-growing Irish technology and life science businesses over the next five years.

The bank’s European president, Phil Cox, told Fora the lender could end up handing over up to a quarter of a billion dollars when the funds it had already committed from an initial $100 million pool were taken into consideration.

“The companies (here) are similar profiles to companies that we would find in places like London or Tel Aviv,” he said. “If there are more of them that come forward and there are more opportunities, maybe the second $100 million won’t last as long.

“We have a strong appetite and will do more if necessary. I would’ve thought that we could have $250 million within another three years from here.”

As part of the latest funding announcement, the bank is renewing its ‘collaboration’ with the state-backed Ireland Strategic Investment Fund (ISIF). It partnered with the ISIF’s predecessor, the National Pension Reserve Fund, for its first pool announced in mid-2012.

The bank, which has over 1,400 employees and more than $17 billion in loans, estimates that it has already allocated between $70 million and $75 million from the stream of cash. It has funded 15 Irish startups including chip designers Movidius and travel software company Boxever.

Silicon Valley Bank EMEA president Phil Cox

Lending speed

“The banks traditionally haven’t lent to these types of companies because they look so different to the companies that they normally lend to,” Cox said.

“If we see the opportunities we have the capacity to do that lending – it really boils down to the demand.”

The bank recently established a full-time Dublin office to handle its Irish operations, which had previously been overseen by its London branch.

Andrew Hunter, who has spearheaded the bank’s operations in Ireland, told Fora that firm tends to lend between $1 million and $10 million at a time.

“We do anywhere from $1 million to about $50 million; here we find that it tends to be anywhere from between $1 million and $10 million.”

Silicon Valley Bank director Andrew Hunter

He added: “The pipeline is pretty good. There are really good companies here (and) we have about $75 million deployed so we’re on track.

“We do venture debt, which is early stage debt for companies that are scaling rapidly, right the way through the spectrum to later-stage, profitable businesses. Most of our funding is in that gap and there has been a gap there in Ireland that we’ve seen.”

The ISIF did not say how much it is investing in the new $100 million fund. Director Eugene O’Callaghan said yesterday that the final amount has not been fully settled on yet.

“The specifics are not finalised yet so we are not able to publicise the number, but our commitment to the relationship includes investing alongside the bank in whatever opportunities may emerge,” he said.

The ISIF recently revealed it was likely to speed up the rate of its investments over the next four years in order to have its full resources committed by 2020.