
At Silicon Valley Bank, risky tech startups are lucrative business - shahryc
http://www.latimes.com/business/la-fi-silicon-valley-bank-20150807-story.html#page=1
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screwedup
> the bank has outperformed bigger rivals, not just by lending to fledgling
> firms but by taking small ownership stakes in them to help offset their
> higher risks

Doesn't taking equity in a company that you've already loaned money to
_increase_ your risk, not offset it? Am I not understanding what's going on?

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fraserharris
The warrants are stock options - free to be given. SVB is not paying for them.
It increases their potential upside beyond the interest rate. Across a
portfolio it makes up for defaults.

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screwedup
Unless your whole portfolio is correlated...

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shahryc
I think the Fed's easy money policy of low-interest rates prop institutional
investors to park money with VCs for higher returns --- the combination of
low-interest rates & lots of money in the valley enable SVB to capitalize on
start-ups, unlike other banks. Curious to know if it was the same during the
dot-com bubble

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marincounty
I recall Greenspan keeping it, and always talking about increases, around
4-6%? He was always warning us of "irrational exuberance". People were
investing like it would never go down. The biggest idiot at the party was
making a killing in the stock market, and bragging about it. The
professionals(stock, financial advisors) were basically telling everyone, "If
you are not in the stock market; there's something wrong with you(you're an
idiot?).

Well the bubble collapsed! I remember a Game Developer came into some
money(his company was bought by EA.), I believe put his $500,000 into the
stock market--one year before the crash. I believe he lost everything? I never
asked, but I know that was a lot of money for this guy. He came from a family
that was always struggling financially.

I am tired of the low interest rates on a personal level. On a completely
selfish level, this recovery has not helped me in the slightest. I don't
invest. Any profit I make on money is my hard work(hustling--buying and
selling stuff), and I have always relied on the interest of CD's. The return
on CD's has been close to 0 for years now. The only reason I keep money in the
bank is because I don't want to bury it, and forget where I buried it! I know
relying on the income from CD's is not savvy, but it's save, and that's
literally how most poor people invest.

I got off base, but this free money I can't get for various reasons. Where I
live homes/rent have skyrocketed. Too many people are paying their whole pay
check for rent. It's not how much you make anymore; It's how much does it cost
to put a roof over your head? People ask why do Developers make so much in the
Bay Area? If not because they are Rock Star Programmers. It's because the
employer knows how expensive it is to live here, and they don't want to live
in Findlay, Ohio. (I happen to love the Midwest, and see the charm.)

I won't speculate if we're in a bubble, but this economy has not helped my
particular economic situation. I do feel the rich have all the access to the
very low interest rates, maybe they always did? My wish is the government
didn't allow anyone entity buy more two realestate investments. Foreigners
should be banned immediately from buying realestate if they are not citizens
first. Maybe it would not work in the end, but I just don't like to see the
extreme speculation in realestate we're seeing now. It's not so easy to move
because your rent went up $750 a month. There's kids in school. There's a lot
of factors. I guess when your young it's easy to pick up and move?

I don't know what to do, but I would like to see Janet Yellen raise interest
rates, or do away with Dodd Frank Act? That's the reason why banks only lend
to the people who don't really need the money? I know a lot of rich dudes, and
they don't start business with the free money; they basically buy realestate
and gamble in the stock market. The money is not trickling down.

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danieltillett
I find it interesting that you are asking for regulation to be done away with
(i.e. Dodd Frank) while at the same time asking for a massive new set of
regulation to be placed on real estate investments.

If you want to solve speculation in real estate start looking at land taxes.
Of course since land taxes can’t be avoided and will mainly be paid for by the
rich and powerful they are none too popular.

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rmason
You would think the CEO Becker had heard enough dubious business pitches that
later proved wildly successful that he would have enough common sense as to
not brand Uber's plan as 'insane'.

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thedogeye
James Slavet is at Greylock not Greycroft

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shahryc
"The bank is aggressive in courting investors as well, part of why it has
become the 'first call' bank for many of them, said James Slavet, a Menlo
Park, Calif., venture investor with Greycroft Partners."

