|Monday, 11 June 2012 12:14
|Comment: Technology company needs loan?
Try Silicon Valley Bank – or ZOPA
The announcement that Silicon Valley Bank is to open a UK branch is excellent news for the country’s technology sector.
Since the economic crash, and indeed for some time before that, technology firms have been hampered by a lack of understanding of their financial requirements and an inability to appreciate what they are trying to achieve. Safety and caution have been the banking buzzwords, to the detriment of many good products.
As we see time and again, new ideas involve thinking out of the box, an element of faith and the ability to see things differently.
From Microsoft, Google and Facebook through to more recent startups such as GoCardless and its Paylinks product, it is innovative fresh thinking companies which prove to be significant in the long term.
Unfortunately the traditional financial sector has very little appetite for risk especially when it is a groundbreaking new product on the table.
As well as covering the launch of the UK branch of US Silicon Valley Bank today, Card & Payments World is also reporting on the fact that P2P lending has topped £250m.
This "new age" finance carries no protection for deposits, but is being tipped as a serious threat to traditional banks. The peer-to-peer sites are led by Zopa, which has lent more than £200m since it started in 2005.
Last month the UK government said it would lend these sort of firms £100m to help expand their own lending to businesses.
If consumers can satisfactorily lend to each other, and if Silicon Bank is confident it can run a good business lending to high technology companies, surely traditional banks in all markets can do the same? If not, they may well wake up to find their best customers have moved elsewhere.