Banks play vital role in starting up a start-up

Congratulations, you’ve founded a start-up. You’ve finally achieved your dream and turned your brilliant idea into a business venture. Although you are still working from home with few available resources, you are on the right path. Now, you have to take the next step forward and open a bank account for your new start-up.

You will very soon discover that, as at every business crossroads, here too you must take smart decisions that require prior and thorough review. Here are some general guidelines to help you with your choice:

Come prepared

When you arrive for your meeting at the bank, it’s important that you come equipped with a persuasive business plan that includes a budget, detailed descriptions for all cash burn rate scenarios for the company’s activity, and the investment necessary to realize the development. The business plan will also help the selected bank and the potential investors learn about the company and its expected business.

Go to the experts

First and foremost, it is important to choose a bank branch with expertise in high tech, where you can find staff who are familiar with the nature of the industry and can give you service that fits the activity of your venture.

Examine the benefits

The best advice for a new high-tech start-up is to choose a bank that is prepared to give you benefits in managing the account on the basis of the venture’s potential, rather than on the basis of its initial expected business.

Set the rules in advance

When opening the account, you should devote thought to setting convenient rules for routine work between the company and the bank. An example of a common mistake is creating a rigid signatory regime. Many companies decide that a large number of authorized signatories are needed for executing a transaction. This and other similar restrictions make it difficult for many companies to operate. Consulting with an experienced banker will help find an efficient solution to such problems.

Use investment advisers

In many cases, the money for investment in the first stage of a start-up is raised from relatives and friends, but the entrepreneur very soon turns to other investment channels, known in the industry as angels or venture capital. Usually, these investments are in foreign currency, but the expenses are in Israel, in shekels. The result is that the venture is exposed to risk from volatility in exchange rates. Entrepreneurs are therefore advised to use the experienced investment advisers whom the bank makes available to its customers. They can offer advice and guidance on creating suitable hedges against losses from exchange rate differentials.

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Prefer diverse direct services

Work in the high-tech world is very dynamic and characterized by varied work hours, sometimes to fit global markets. It is therefore important that the account will be at a branch that provides its business customers with multiple direct services, which can carry out almost any banking transaction online and securely - and above all, at any time and from anywhere in the world.

It is also very important to be in contact with the dealing room to carry out transactions, such as foreign currency hedges, ordering foreign currency, or collecting it at the airport, outside of the normal banking hours.

In conclusion

Your decision where to manage your venture’s bank account is not a simple decision. It can have a material effect on the business’s conduct and its chances of success.

The right choice of a bank, and proper management of and expert advice for the account will help create synergy in the work relationship with the bank to create added value for the company and will be an important part of its development. Good luck.