David Cohen, partner and CFO at venture capital firm Gemini Israel Funds, is leaving his post after 13 years, and will shortly take up his new job as general manager for SVB Israel Advisors Ltd. (SVB Israel). Silicon Valley Bank (SVB) is a business unit of SVB Financial Group (Nasdaq: SIVB), founded 30 years ago with the aim of providing banking and financial services to technology and life sciences companies, venture capital firms, and the wine industry. What do semiconductors have to do with a bottle of merlot? It turns out that many of Silicon Valley's early entrepreneurs towards the end of the 1980s made millions of dollars, retired, and bought vineyards and wineries. Thus SVB got into banking services via high-tech.
In an exclusive interview with "Globes" just before starting his new job, Cohen says that SVB has a platform that has been enhanced over the years to provide financial tools that will serve start-up companies. "SVB is not just another bank that provides services to technology companies as well, like any bank, but is chiefly oriented towards them, knows the needs of these companies well, and has a wealth of solutions to offer."
The financial group is traded on Nasdaq with a market cap of $2.5 billion, and it includes a dedicated commercial bank for technology companies and services to venture capital firms around the world, which helped it through the credit crisis in 2008.
Before it opened its offices in Herzliya, SVB operated in Israel remotely since the 1990s. At that time it provided services to companies, while its investment arm invested in five venture capital funds, among them Gemini and Pitango, and in six local companies, among them N-trig, Peer39, and Kaltura.
"As time went on, the bank decided that there was enough activity in Israel to set up and run a local branch that would be profitable," Cohen says. "A few months ago, they offered me the post, and I was glad to accept. There's an opening for successful activity here, because Israeli high-tech companies have the potential and the need, while Silicon Valley Bank has the platform for meeting those needs."
In what way are you different from the other banks in Israel?
Cohen: "Banking activity in the Israeli high-tech industry is fairly small, but there is no reason that the local companies shouldn't receive advanced services that will help them grow. In the US, for example, companies that reach maturity and are profitable aren't afraid of debt. It's part of their financial planning. In Israel, companies are averse to debt, and even companies that reach Nasdaq do so without taking on debt along the way, and sometimes even without making acquisitions. There's no reason to avoid the debt tool; everyone uses it."
What financial tools do you offer?
"A complete package of creative services tailored to the needs of the company and its ability to make repayments. We won’t take the risks of a venture capital fund, but the bank has tools that can help companies reach the goals they have set themselves. We can assist with the bank's large network of customers, with extensive ties in the business centers of the US, Europe, India, and China, and connect Israeli companies to that widespread network. It happens as you work."
According to Cohen, the new Internet and software companies create a challenge for the banks that provide services to them: "The business models are developing, and creating appropriate financial products has become an art form. SVB has proven ability to meet new challenges."
What are your ambitions at the bank?
"My goal is to reach a point where the bank has a broad portfolio of customers in Israel that reflects the mix of customers in the US."
Cohen is being joined in managing the new branch by Gadi Moshe, formerly of Bank Hapoalim's high-tech division, and later a senior manager at Plenus Venture Lending and a partner at ETV Capital.
After more than a decade as a CFO, exposed to the books of many start-up companies, how do you see the Israeli high-tech industry?
"There is extraordinary innovation in Israel, and I can't imagine a situation in which it will cease to exist. There is managerial talent in every field, at every level. Companies are global now from day one, and the way they spot the potential in India and China shows that they adapt themselves quickly to changing market conditions."
Published by Globes [online], Israel business news - www.globes-online.com - on June 1, 2011
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