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Stayin' Alive

Entrepreneur, August, 2001 by C. J. Prince

STAYIN' ALIVE: Some expected Silicon Valley's signature bank to crash along with the dotcoms it finances. But Silicon Valley Bank CEO Kenneth Wilcox says low exposure has kept them safe--and growth is in the offing.

Early-stage, venture-backed tech and life sciences companies make up about 70 to 80 percent of your portfolio. How are you faring in the dotcom meltdown? KENNETH Wilcox: Our investing model is based on the idea that if a company has intellectual property, you've got a backstop, and there's a very good source of repayment there. We've financed a number of infrastructure and backbone companies, which tend to have intellectual property, but the e-commerce companies don't usually, so we've tried to stay away from them for the most part.

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How about defaults?

Wilcox: No, we haven't seen an increase in the number of payment defaults, but we have seen a marked increase in the number of companies that are not meeting their projections. In the end, we're still getting paid, but companies are having a lot harder time meeting their projections.

What changes have you made to deal with the tech-sector failures?

WILCOX: We watch things much more closely now. Instead of looking at a company every six or eight weeks, we may look at its progress every three or four weeks. But our modus operandi has always been that we support companies that are supported by investors. In that way, we haven't changed at all.

How bad will this get?

WILCOX: Some venture capitalists [are looking at this quarter or the next] as the time when they will have taken care of all the stray cats and dogs in their portfolios and be more able to go after new opportunities.

Business Services Industry

Stayin' Alive

Entrepreneur, August, 2001 by C. J. Prince

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