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Silicon Valley Bank expanding Canadian life-sciences, venture-capital and private-equity businesses

Silicon Valley Bank’s Santa Clara, Calif. headquarters. The bank has over a dozen staff in Toronto. Silicon Valley Bank
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Silicon Valley Bank (SVB) is bringing in new executives to grow its roster of life-sciences, venture-capital and private-equity clients in Canada.

This would be the first time the Santa Clara, Calif.-headquartered financial firm has managing directors for these areas in Canada.

The new hires follow the announcement that SVB’s country head would depart in June. They would double the number of staff at the managing director and above that it has in the country, and open new fronts in its growing competition for innovation clients with Canada’s largest banks.

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Talking Point

Silicon Valley Bank (SVB) is hiring two managing directors in Canada following the departure of Barbara Dirks as country head. The new executives will be tasked with growing SVB’s life-sciences and global-fund-banking businesses—both areas in which it’s a major player in the U.S.—and going up against Canada’s largest banks.

SVB is facing increasingly stiff competition in tech as Canada’s incumbent financial institutions start lending large sums to the sector. CIBC Innovation Banking agreed to provide over $800 million in financing for firms between January 2018 and April 2019. In August 2018, RBC partnered with Espresso Capital, a venture debt firm, to do joint deals. And, in April, BMO announced a new technology and innovation banking group.

SVB has about US$2.3 billion in funded loans in the life-sciences sector in the U.S., according to David Sabow, head of technology and health-care banking for North America, who would not provide the corresponding figure for Canada. “Technology gets a lot of buzz in Canada—as it should, by the way,” he said. “We’re equally as excited about the life-sciences opportunity there.”

The two new managing directors will double the number of executives in Toronto at that level of seniority and above, according to LinkedIn data. Currently, the office includes Win Bear, head of business development for Canada, and Tony Barkett, a managing director focused on technology. Both moved from Boston this year.

Sabow said the bank currently has over a dozen staff in Canada and is looking to fill roles at all levels of seniority in the country. He added that SVB employees in other countries have expressed interest in moving to the country. “You’re going to see a nice mix of internal resource alignment, as well as some great talent from within the local economy,” he said. SVB is also hiring for a vice-president of credit solutions and a second implementation manager in Canada.

SVB also plans to bring in a replacement for Barbara Dirks, who announced her departure in June. “We are going to hire a principal officer in Canada,” said Sabow. The bank has promoted Denis Nagasaki, formerly chief of staff, to Canadian director of strategy and operations and designated him as principal officer in the interim.

The company is looking for someone with “10 or more years of related experience in the life sciences and healthcare ecosystem,” according to its job posting. The managing director will develop new business for the bank, and oversee its existing relationships in the sector. SVB’s Canadian life-sciences clients include Vancouver cancer drug developer Sierra Oncology and Toronto-based HLS Therapeutics, a pharmaceutical company for which the bank’s U.S. arm co-led a US$125-million financing in September 2018.

While he acknowledged that there are “a host of groups that focus on the innovation economy from a generalist perspective,” Sabow said SVB wins customers because of its sector specialization. The new life-sciences managing director will be part of a global team that includes ex-venture capitalists; former executives from major pharmaceutical companies; and SVB Leerink, an investment bank that the company acquired in November 2018.

Within the health-care space, Sabow sees particular promise in the applications of artificial intelligence (AI) and machine learning. “We have a number of exciting clients that are … using things like AI and big data interrogation to have better drug-target identification and drug development,” he said.

The bank is not the only one looking to provide capital to the life-sciences sector. Private equity firm DW Healthcare Partners raised a US$610-million fund in July to take majority stakes in mid-sized companies. And, BenchSci, a Toronto-based AI medical-research platform, recently received $7.3 million in venture debt, although it did not disclose who provided the loans.

SVB’s second new managing director will lead the Canadian practice for global fund banking, which serves venture capital (VC) and private equity (PE) firms. The recruit will “build strategic relationships with key executives and influencers in the ecosystem,” per the posting. The two managing director postings have been up since at least March.

In the U.S., 60 per cent of VC firms and 50 per cent of PE firms are SVB clients. It did not disclose comparable numbers for Canada, but said it does have Canadian VC and PE clients, and also serves U.S. funds operating in Canada.

Sabow said it made sense to expand the global fund banking practice internationally because VC and PE firms—and the institutional investors that provide their capital—“tend to play across borders.” And, he said the bank sees such funds as a growing market in Canada, noting that SVB calculates Canadian firms raised a combined $1 billion in rounds of $50 million or more in 2018.

“A company that raises that level of capital is not looking for a $100-million exit, they’re looking for a world-class exit,” said Sabow. As the number of those deals increases and Canadian investors start to cash out their stakes, “that justifies much larger funds,” he added.

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The company would not disclose the share of the life-sciences and global-fund-banking markets in Canada it is targeting.

The bank has recently participated in some significant raises by Canadian firms. In June, it took part in a $32-million financing for Xanadu, a quantum computing firm, and a $20-million equity and venture debt round for Borrowell, the online loan provider. SVB’s Canadian business consists of lending; it is not licensed to accept deposits in the country, or provide private banking to individuals, as it does in the U.S.

The tech divisions of the incumbent financial institutions have also been busy. In April, CIBC Innovation Banking gave Lightspeed POS US$55 million in credit facilities, replacing a US$15-million line-of-credit from SVB. In January, Scotiabank provided an undisclosed amount of debt financing to Edmonton-headquartered Yardstick, an employee-training and -testing software firm, as it bought out some shareholders.

Clarification: This piece has been updated to reflect that SVB’s life sciences and global fund banking managing director job postings have been up since at least March.