From Wicklow to SiliconValley: the banking boss playing a pivotal part in backing top tech firms
Irishwoman Claire Lee leads the early-stage banking operations for Silicon Valley Bank, the industry's most influential non-VC lender. She speaks to our technology editor about imaginary tech bubbles, the gender wars engulfing tech and whether or not Irish startups can benefit from moving to the US
It's been a good year for Silicon Valley Bank. The tech industry's most prolific specialist bank just reported record quarterly income of $123m (€105m).
It also added around 1,300 new clients, who signed up to take advantage of the bank's venture-focused style of lending. In all, it now has €36bn in banking deposits and some €44bn in client investment funds.
Sitting in the middle of this boom is Claire Lee, the company's Wicklow-born managing director for early-stage banking.
Now in San Francisco over six years, Lee was recruited into Silicon Valley Bank from Microsoft, where she was the principal of Microsoft Ventures and head of partnerships.
As well as seeking out some of the best new tech companies to hook up with, Lee has worked on projects such as Stripe's Atlas service, which gives startups anywhere in the world access to a US incorporation status for the purposes of trading online.
She was also an adviser to former US President Barack Obama's state department, even penning some of the lines he delivered at events.
As such, there are few better placed individuals to answer questions about what opportunities Silicon Valley offers Irish startups and tech companies.
Should Irish companies move to the US? Will bankers find talented companies or do startups still need to beat a path to financiers' doors? And are prospects improving for female tech founders in the geopolitical centre of the industry?
Having moved from Wicklow Town to the UK and then San Francisco, Lee is pragmatic on the issue of a working domicile.
"You have to have some presence or ties to the US in terms of your client and customer acquisition or your distribution," she says. "There are couple of reasons for this. First, the US is simply a massive target market. Second, it's the centre of gravity for venture capital, always was and probably always will be.
"Add to that that you'll find most of the best tech companies in the world here and I do think that coming to the US, even having an office here or some kind of partnership, is going to increase your probability of success. Raising capital here is also going to be a big boost. Most of the data I've seen supports this. The companies that exit well are often the ones that have had a Bessemer or an Accel or a DFJ [top VC firms] associated with them."
To make the point, Lee cites Movidius, the Dublin-based semiconductor design firm bought by Intel for over €300m last year. Silicon Valley Bank was involved in financing Movidius, as was senior Irish venture capitalist Brian Caulfield of Draper Esprit. But Movidius stayed in Dublin, despite being involved in a sector which seemed tailor-made for a US headquarters.
"Other than that Movidius is an amazing company, what made the difference there was probably Brian Caulfield and the fact that he was able to use his US network and bring that to bear," says Lee.
"So the fact that they were able to stay in Dublin is fantastic. But they needed to leverage a lot of US power to get that. Irish firms can have your a HQ in their home country, which is what a lot of Israeli companies do. But they often set up a significant sales office here."
Major Irish tech companies to follow this general strain of thought include Intercom, which keeps most of its research and development in Dublin while operating its sales and marketing operation from San Francisco.
There are other reasons to favour a stint in the US, she says. "There's undeniably a spirit of entrepreneurship here. You kind of get bitten by it, you get a bug. Then you go back where you came from and realise that it's expanded your horizon or perspective."
Silicon Valley, though, is often peered at from afar as a kind of bubble. Whatever about the cultural validity of this observation, Lee doesn't hold with accusations that San Francisco is artificially propping up an over-inflated tech bubble.
"Honestly, we're not seeing it," she says. "I don't think there really was a bubble. Sometimes I joke that we're in a bubble within a bubble, being in tech and in Silicon Valley. It can get pretty myopic.
"That said, mostly what I see are quality companies and it really is only the best companies that are getting funded. Despite cheque sizes going up, the number of deals has halved. VCs are just way more selective than they once were, with a lot of them doubling down on existing portfolio companies.
"When they do go for new deals and investments, they're really choosy. So if you look at who's getting seed rounds and Series A funding, you've got to be really good at what you're doing to get venture capital."
Ireland is creeping up the radar of Silicon Valley financiers, says Lee.
"Something like 50 of our clients have invested in Ireland," she says. "When you think of successful US startups that are venture backed, the fact that 50 of those have created operations in Ireland is pretty interesting."
The bank doesn't publish its list of clients, but claims to back 50pc of all US venture capital funded tech and life science companies and 47pc of US tech and life science companies to achieve an IPO in 2015.
This almost certainly means firms of the calibre of Dropbox or Airbnb, which have flocked to Dublin to set up European headquarters in recent years.
Brexit doesn't appear to be dampening the appetite of US venture money into the region, either. "Of the top 50 US venture capital firms, 23pc of them are investing in UK or Irish firms," says Lee. "That's relatively high. And it definitely talks to the quality and credibility of the companies being started in the UK and Ireland. I don't know if you would see the same ratios for Mexico and Latin America."
"Brexit hasn't materially affected our business or our clients' business. We're not seeing any slowdown. Aside from anything else, the British are working very hard in Silicon Valley, creating a diaspora here. Maybe they're trying to catch up with the Irish."
Being a senior female executive in a global tech firm is a notable thing. Being a senior female executive in a venture capital environment is arguably even more of an achievement. Our interview was conducted before the recent controversy involving a (now fired) Google engineer, James Damore, claiming gender gaps in tech were "evolutionary" and not a result of sexism.
There's no doubt the figures around funding for female-led tech companies are dismal.
In the US and in Ireland, under 3pc of tech venture capital goes to female entrepreneurs. In Ireland, the average individual investment in a female-led tech firm is 10 times less than that for male-run firms, according to research conducted by this newspaper.
That research, based on official venture capital industry statistics, shows that in 2015, the average investment for a VC-funded tech firm with a female founder was €911,000, while the average for a company with a female chief executive was €591,000. That compared to €5.46m per investment for companies founded and run by men during the same period.
Lee is in a frontline position on the issue.
"It's a big, pervasive issue and it bugs the hell out of me," she says. "We have a cultural mindset when it comes to the unconscious biases or implicit biases that occur when a female founder comes to pitch. These can affect the thought processes that go on when it comes to evaluating that founder's credibility.
"Lots of programmes the industry tried just haven't been effective in dealing with it. So the data is depressing."
So is there anything that can be done?
"Absolutely. Firstly, I'm really pleased about the honest conversations that people are now having about it. A few years ago, the industry was arguably a bit passive on the issue, thinking it would be fine some day. I don't see quite that same attitude today. I really feel like it's becoming a burning issue.
"I see more credible organisations doing things about it. We're starting to see people in positions or real power who can probably make a difference. We like to think we're part of that. I think we have a long way to go though."
Lee also thinks that younger tech founders and venture capitalists are responsible for a change of mindset when it comes to assessing female tech pitches.
"The younger generations of founders and VCs think differently. I don't know that they feel the boundaries the way that we do. In venture firms, there are a lot of younger partners now, maybe who were part of tech companies that got acquired and now they've into VC roles themselves. Or maybe they left a bigger firm to go out on their own. They have a different, better attitude."
Otherwise, Silicon Valley Bank's prospects seem to be good. Because of its niche expertise, companies seek it out as much as the bank hunts for the best companies. Lee says that she is still looking for the best prospects, whether in San Francisco or Sligo.
"We've been lucky, in the sense of where we are and the clients we have," she says. "It's one of the reasons I came here. The data would indicate that this is the venture capital bank. Our clients are outperforming the market. They are raising at a faster rate and at a higher rate than companies that are not clients - and they are raising more money than companies that are not clients.
"We're also a lot more focused than we ever were. Through partnerships with Stripe and the likes of Techstars and Y Combinator, I'm very bullish about what we can do. So we get a lot of inbound interest.
"But going forward, I'm interested in attracting the best companies. I want to show that we support them earlier than anyone else, that we have the strength of these partnerships. It's not just talk, it's something very material."