Banking for Startups: a Beginner’s Guide
For a long time, Silicon Valley Bank was the best friend of any startup. Until… they weren’t. After a bank run in early 2023, the bank collapsed. Roblox lost 5% of its $3B in cash, Roku held about $487M at SVB, and many others were affected.
It goes to show that the right banking partner can make all the difference for a startup. But how do you pick the right partner? What do startups need in a bank? And what are the options available?
Let’s find out.
Understanding Startup Banking Needs
Finding the right banking partner can be as crucial for a startup as the business idea. Did you know that 47% of all startups worldwide fail because they can't secure enough financing or investors? And around 14% of startups find their end because of financial uncertainty. The right banking partner is the foundation for any successful startup.
Startups often operate in fast-paced, dynamic environments. They need banking services that can keep up with their ever-changing needs. Flexibility is key. Whether it's managing cash flow, processing payments, or securing funding, startups need a bank that can adapt to their unique circumstances.
Startups often face unique financial challenges that traditional businesses may not encounter. From managing an unexpected drop in income, to getting caught up in endless regulatory requirements, startups need more than just a place to store their money. They need a partner who understands their journey and can provide guidance.
Getting your banking right is more than just a box to tick off as a startup founder. It's the foundation upon which your startup's success is built.
Choosing the Right Bank As a Startup
Alright – the bank is crucial for startup success. But how do you find the right one for your startup?
First, identify your needs. Take a moment to think about what your startup really needs from a bank. Do you want 24/7 support? Or are quick loans in case of emergencies a priority? Maybe you just want the one with the lowest fees. Establish your needs upfront, and ideally even rank them from most important to least important.
Second, explore the options. Once you've figured out your needs, it's time to look at the available banking options. Take a look at what different banks offer and see which ones align best with your requirements. Consider factors like fees, services, online banking features, and any special perks for startups. We will look at some of the options later in this article.
Third, go meet people. Don't just rely on information you find online or in brochures. Go out and talk to real people at the banks you're considering. Schedule meetings or drop by their branches to have a chat with representatives. Building a personal connection can give you valuable insights into how the bank operates and whether it's a good fit for your startup.
These interactions can make all the difference for your startup. They could be the key to finding the right partner. And the right partner could be the difference between your idea turning into the next unicorn, or never even getting its first customer.
The Different Options Available
When it comes to banking options for startups, there are endless choices. Let's take a look at a few examples.
Bridge Bank
With its Bridge to Growth Analyzed Business Checking Account, Bridge Bank offers startups a perfect banking solution. The account comes with a range of benefits, including no monthly maintenance fees, secure online and mobile banking platforms, and access to a network of tech-focused partners. Plus, new clients enjoy a competitive introductory rate on their money market account.
We had the VP of Startup Banking at Bridge Bank, JP Ferro, on our podcast. If you want to learn more about Bridge Bank’s approach to startup banking, listen to the episode here.
Stifel
Stifel launched its Venture Banking arm in 2018. This arm is focussed on seed- through late-stage ventures and offers solutions in treasury management, credit, and lending. Through its dynamic digital platforms and personalized lending options, Stifel is a partner for startups every step along the way. As they say themselves, even after 130 years of experience, they still “think like a startup.”
Silicon Valley Bank
SVB Startup Banking offers banking solutions for startups, such as free checking for three years, up to 5.10% APY on qualifying balances, and double rewards on purchases. With Silicon Valley Bank, startups can grow without worrying about fees. Its services include payment processing, global growth support, and discounted partner offers.
Mercury
Mercury Startup Banking has FDIC-insured checking and savings accounts, time-saving accounting features like drag-and-drop bill pay, and auto-sync with accounting tools that streamline financial management. They offer personalized support with 1:1 relationship management from experts with experience in the startup world. And with Mercury’s Treasury options, startups can earn up to 5.39% yield.
It's important to note that these are just a few examples of the banking options available to startups. There are plenty of other banks and financial institutions out there, each with its own features and benefits. Make sure to do your own research and choose the bank that best aligns with your startup's needs and goals.
Key Takeaways
Let’s recap:
Finding the right banking partner is crucial for the success of any startup, with financial uncertainty being one of the main reasons startups fail.
Startups need banking services that are flexible and adaptable to their fast-paced and dynamic environments.
To choose the right bank, startups should identify their needs, explore the options, and talk to people at the bank
Examples of banking options for startups include Bridge Bank, Stifel, Silicon Valley Bank, and Mercury.
The key is to do your own research and select the bank that best aligns with your goals and needs.
The right banking partner can make the difference between your startup reaching unicorn status, or never even seeing its first customer. Do your research and choose wisely.
