Silicon Valley Bank, which has struggled to generate deposits in recent quarters, is hoping its seed-capital business will help.
The operation, recently established as a separate division, works to connect small investors with start-ups seeking capital.
The Santa Clara, Calif., bank does not collect a fee for the service.
"It's a strategy to increase our deposits," said vice chairman Harry W. Kellogg, the head of strategic initiatives. "If we help [entrepreneurs] to raise money, we would like them" to think of the bank when they are ready to deposit it.
Mr. Kellogg oversees the business along with Steve Empey, the manager of the bank's professional services division. John P. Flinn, who has been running the seed-capital operation since joining the Silicon Valley Bancshares unit in 1998, reports to them.
The bank has been helping entrepreneurs raise capital since it was founded in 1983.
In the fall it began hosting a series of showcase events for investors to view start-up companies. Last Wednesday 160 investors showed up for its third such pageant; Mr. Flinn invited about 30 of them, Mr. Kellogg said.
Generating deposits is no small matter for Silicon Valley, whose bottom line has been hurt by its inability to find or keep them. In March it warned investors that its core earnings per share this year would likely fall short of expectations, primarily because of a decrease in deposits -10.5% in the 12 months through March 31, to $4 billion.
Silicon Valley has no plans to hire additional investment professionals to assist Mr. Flinn.
In addition to facilitating relationships between companies and investors, Silicon Valley Bank itself invests in start-ups, both directly and through venture capital firms, he said.
The bank raised a $135 million fund-of-funds vehicle, which closed in November. So far $112 million from the vehicle has been committed to venture capital firms, Mr. Kellogg said. The bank also established a $57 million equity investment fund in December for direct investments in technology and life sciences start-up companies, he said. "Our goal is to help entrepreneurs in a myriad of ways," Mr. Kellogg said.
Entrepreneurs sometimes need between $100,000 and $1 million to get started, which is often less than traditional venture capitalists are willing to invest, Mr. Kellogg said.
This void creates opportunities for so-called angel investors, the kind of individual investors Silicon Valley is targeting with its seed capital practice, he said. In the last two years angel investors have emerged as a solid force, often forming consortiums to invest together, he said.
