Silicon Valley Bank and the Clean Tech Investment Space

“Let’s take a step back and talk about the difference between debt and equity – they both have their own uses. You should be financing assets with debt. Equity, you can finance either expenses or assets,” points out Frank Amoroso of the Silicon Valley Bank. He goes onto say, “However if you have worked hard and sold a portion of your company to raise equity, if you don’t have to, you shouldn’t use those equity dollars to finance assets, if you can get debt dollars to do so. And then you take a look at the company’s balance sheet and income statement. If the company has balance sheet strength they should be able to qualify for some kind of debt. Absent balance sheet strength or P&L strength, really what you’re talking about is equity. As a federally regulated banking institution, we like to think of ourselves as quite a bit different than the other 8000 banks in the US. Clean tech area is hot and Frank is one of three individuals across the nation dedicated to clean tech practice. ). “Definitely clean tech is hot, sustainability is hot, you get the sense that more and more investors are stretching to look into this market sector. The way that SVB is looking at that is going to be an extension of our historical model. That is to leverage that equity investment with debt. The right amount of debt, every company has its own balance of debt vs. equity, there is a correct number. We’re really more focused on the tech part of clean tech, disruptive intellectual property, professional equity sponsorship, if a company has both of those in the clean tech space, then we’ll be able to do even more than we’ve historically been able to do. If on the other hand the technology is a great efficiency plan, installing all new solar panels, or it’s maybe a lighting technology, you know, still interested. Can we be as aggressive? Can we get in as early, do as many things? Probably not, because our historical model has been to truly leverage that professional equity sponsorship.” Frank also addresses potential challenges including the credit crunch and the high-tech bubble reoccurrence. LISTEN Bytes: 25231676
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