US bank sets aside €80m for Irish tech start-ups
New businesses will reap benefits of first lender to open operations here since start of the crisis
US-based Silicon Valley Bank has announced plans to lend €80m to start-up technology companies, becoming the first new bank to open for business in Ireland since the start of the financial crisis.
The US bank already does some business in Ireland, with around a half a dozen business clients here, mostly start-ups backed by US investors that are clients of the bank.
The lender is a niche business bank that lends exclusively to technology companies. Its focus is lending to high-potential start-up companies in the technology and life science sectors.
Such firms are seen by the Government as a key driver of future growth in the economy, but start-ups are struggling to secure lending and specialist services from traditional banks.
Ireland is only the fifth country outside the US where the bank will have a presence.
The deal was announced by Finance Minister Michael Noonan, the bank's CEO Greg Becker and National Pension Reserve Fund (NPRF) chairman Paul Carty in Dublin yesterday.
It includes two linked transactions. Silicon Valley Bank will establish an Irish presence with a target to lend €80m over five years.
As part of the agreement, the NPRF -- which acts as the State's savings arm -- is to put up €40m into investment funds managed by Silicon Valley Bank Capital, an investment arm with links to the bank.
Investment director of the NPRF Eugene O'Callaghan said that the investment was on a commercial basis, not on the direction of the Government.
He said investing alongside the bank would give the NPRF access to US investment opportunities that would otherwise be closed to new investors.
Silicon Valley Bank's Greg Becker said the decision to invest here was not dependent on the Government investment.
He said the support of the NPRF and Enterprise Ireland meant the bank was moving into Ireland more quickly than it would otherwise have done.
"We'd like to thank the Irish Government and particularly the NPRF for their proactive approach and support," he said.
The NPRF investment will not go into the same investment pot as the cash to be loaned to business here. It will be invested into a fund that makes secondary investments in global ventures.
The move into Ireland will not require Silicon Valley Bank to gain a banking licence here because the bank will not take deposits from clients.
The bank has been active as a lender in the UK market for the past eight years, before it gained a banking licence last week, meaning it can no offer a full service banking service there.