Bridge Bank offers important services to startups

Kelly Caviglia of Bridge Bank - Podcast Transcript

Healy:	Hey, this is Healy Jones, VP of Financial Strategy here at Kruze Consulting, andI want to say thanks to our podcast sponsor, ARC. At Kruze, we’ve got a number of clients successfully using ARC to manage their deposits, payments, access financing, all in one place. One of the things that ARC provides that’s really great is over a quarter of a million dollars in FDIC coverage. Their insurance program goes beyond the standard limit and it secures up to five and a quarter million dollars. So, startups that have even more cash than that can go and access treasury solutions to provide yield and safety. If you’re a startup looking for a secure financial solution that can help you scale, please check out our sponsor ARC at ARC.tech.
Scott:	Welcome to the of Friends podcast with Scott Orn at Kruze Consulting, and today my very special guest is Kelly Caviglia of Bridge Bank. Welcome, Kelly.
Kelly:	Thanks. Glad to be here.
Scott:	Oh, yeah. So, we’ve worked together, been friends for many, many years, I think something like five years maybe. And you are a great partner for Kruze, for our clients at Bridge Bank. And so, I want to have you on, maybe just start by retracing your career a little bit and tell us how you landed at Bridge Bank.
Kelly:	Yeah, my career has been a little interesting. I started my career at SVB in marketing, mainly by way of, I graduated in the downturn of the economy and I was a personal trainer for a little bit until one of my clients said, “Hey, you’re good at telling people what to do, come work for me.” And she worked at SVB. I actually studied sport management, so the opposite. I thought I was going to be a sports agent, so I was there for a while. And then-
Scott:	Wait, so it went personal training to sports agent?
Kelly:	Well, I wanted to be a sports agent because I studied sport management. I was just a personal trainer because it was the downturn of the economy and I needed to find a job. And so that was my holding pattern.
Scott:	I worked in sports agency in college, and it was not a industry. I got a very close look at it and it was not-
Kelly:	Yeah, now that I’m older and I look back at it, probably best that I didn’t end up there. Yeah. I left SVB because I was in my twenties in San Francisco and thought it would be best to go work for a startup, and I worked for a fitness tech startup from first client all the way through acquisition. So that was a really good experience, gained a lot of knowledge, which now helps me relate to my clients a lot better. And then after that, I went back to banking. It was a good experience, but I wanted some stability back and was at First Republic for about three years, and then I joined Bridge about two and a half years ago to lead their early stage startup banking practice.
Scott:	You’ve had a really rapid rise at Bridge Bank. It’s been awesome to watch because all of a sudden we were just chatting up last week and you’re running the whole, is it early stage practice or how’s it work?
Kelly:	Yeah, we call it startup banking, but yeah.
Scott:	That’s amazing. And we should note that we’ve had Mike Lederman on a couple of times from Bridge Bank who really, Mike’s more of a venture lender. So, this podcast is going to be focused on the banking services and how you can help the Kruze client base. And specifically probably, I’d say it’s probably fair to say the early stage, right? That’s where you play the most?
Kelly:	Yeah. Our team focuses on pre-seed, seed stage companies, so anything pre-series A. Before they really get that larger institution around.
Scott:	But I am sure you see the same thing we do, helping those companies get things right the first time around is so much better, and usually they’re pretty grateful and they stick around for a while. So, I am with you on that business model. So maybe highlight, just tell everyone a little bit about Bridge Bank and where they play in the market and capital and all that kind of stuff.
Kelly:	Yeah, absolutely. So, Bridge Bank was founded in 2001 in Silicon Valley. Core focus of working with tech and startups from incorporation all the way through IPO. So really making sure that we’re with them for that whole life cycle. Our sweet spot has always been venture debt. Now we have the earlier stage side of things where we can be, again, that whole life cycle. In 2015, Bridge Bank was acquired by Western Alliance Bank, which is based out of Phoenix, Arizona. Western Alliance Bank has eight different banks underneath our umbrella. So, we all do something very different from each other. For example, AmeriHome is one of our sister banks, and they focus on home mortgages. We are the tech and startup arm of the bank. Western Alliance Bank is about almost $71 billion in assets right now.
Scott:	Wow. Big one.
Kelly:	Yeah, so I think it’s in the top 25, which is always constantly changing, of the largest banks in the United States right now.
Scott:	I remember you guys got caught up in some of the collateral damage around SVB and First Republic, and I remember, I think I talked to Mike actually and was like, “What’s going on?” And he’s like, “We don’t really get it because we’re heavily, heavily diversified. We do have some startup.” The startup practice is pretty big, but relative to the rest of the bank, it’s a pretty small piece, right?
Kelly:	Yeah, absolutely. I mean, we’re, like I said, eight different brands and banks doing something completely different from each other, and we’re the only tech component of that.
Scott:	Yeah. Yeah, that’s great. That’s awesome. And you have the benefits of diversification scale, but also you can be very focused on that client base. That’s awesome. And so, do you have a regional focus? I mean, I’ve always lived in the Bay Area, so we’ve always interacted, but you’re in Texas.
Kelly:	Yeah, yeah. So, I’m in Texas. Yeah, I mean, I think we’re a little bit more heavily focused on the West Coast just because that’s where we originated. So, you have San Jose, San Francisco, we have Seattle offices, So Cal offices, and then we do have offices, corporate offices, not necessarily branches, even on the East coast, New York, Boston, DC, in Austin and Denver and Chicago, so all the major tech hubs. But at the end of the day, all our clients are remote, so it really doesn’t matter. I’ve got clients in Michigan and Idaho. It really doesn’t matter at the end of the day.
Scott:	That’s great. That’s great you can cover everybody. And so then in terms of how do you position the early stage practice versus some of the big banks? The giant banks out there, and then some of the… I don’t even know what you call them, internet-oriented banks?
Kelly:	Like a FinTech? Yeah. Yeah. So, I think we are uniquely positioned because two things that I love about Bridge is we’re very relationship oriented. So, you have that more strategic vision for the company as they go forward. So, when you start early with a bank, and as a startup, especially if you’re a first-time founder, I always say, “Do your due diligence and make a decision that’s going to be with you for not only the next 24 months, 12 months.” It’s easy to get caught up in the instant gratification of this is easy to onboard, but just your business plans that you’re creating, what is going to be valuable to me and supporting my business in two years, five years? When I need debt, does the bank I’m looking at offer debt? What are those requirements that I need to start thinking about? And maybe they don’t even know what those questions are, but talking to their partners like you or their law firms, it will help give some guidance on that.
Scott:	It’s not just debt, it’s like sophisticated cash management-
Kelly:	Or exchange, depending on their business model and their needs. And I think that also goes back to that strategic relationship because when you have a banker that their name for us, you have the same team for the extent of your relationship with the bank. So when you start early with us, we’re growing with you. So, you know my name, your banker’s name and email address and phone number, and you can call us and say, “Hey, I’m about to raise my series A, or I need to set some benchmarks. What do I need to do for debt to make sense?” And we can go through that together, so we have a plan versus scrambling last minute. And I say that a lot with early-stage founders is scrambling because they all of a sudden realize they don’t have the services that they need.
Scott:	Also, I think the plan thing, especially around debt, is really smart because sometimes I feel a lot of calls like that where if they would’ve planned ahead and maybe put debt in place when they raise the series A or something like that, you don’t have to draw it down right away, but just get something in place, it would’ve really helped the company versus being on the verge of running out of money and then trying to raise debt, which is kind of impossible to do. So, I think I like how you guys have, I mean, I really value the relationship aspect because from an accounting perspective, being able just to call you or call Mike or other people on the team and be like, “Hey, can you help us out here or take a look at this client?” That means the world to us because you just make us more efficient, and you help our clients be successful. I’d say a huge value add, but also the willingness to get on the phone and talk through something sophisticated like debt or cash management is pretty big. These are big decisions and especially founders, oftentimes they’re like an amazing engineer or an amazing salesperson, and they started this company, and this wasn’t part of their toolkit. So, they need some help on it.
Kelly:	And I think a lot of times when we’re specifically talking about pre-seed and seed stage founders, especially, again, if they’re first time founders, they may not even know what venture debt really is because they’re always like, “Well, can I get a loan?” because they’re used to going to the consumer bank and like, “Oh, I get a loan and it’s personally guaranteed.” And that’s not the case. It’s completely different. It’s specific to venture backed startups. And for example, we had a client, we sat down with them and said, “Hey, you’re not ready for debt, but here are the markers we would need to see in order for this to work.” And they went out and six to eight months later they came back, and they hit all those markers. And so, we were able to get them a term sheet just based on that.
Scott:	I love it. I love it. And then in terms of the tools you offer, the logged in experience and that maybe just can you walk people through the things that make you special on that end too?
Kelly:	Yeah, I think for early stage startups, your banking needs are simple or they should be at that point.
Scott:	Hopefully.
Kelly:	You need a checking account to hopefully take in some money from investors. You need to pay some bills and some other vendors, and that’s probably it. Obviously, there might be some excess cash from investors that maybe you need some cash management solutions for. But when we’re talking about just the checking account, the first thing that we do is if you are a startup client, pre-seed, seed stage, we waive your banking fees on your checking account for up to three years. So really making sure that it sounds cheesy, every penny counts, but in reality, when you’re getting charged $200 or whatever it is based on your transactions, it adds up when you’re trying to grow a business and start from scratch, especially if you’re pre-seed or you just got incorporated. So that’s a big one. And on that note, if you can deposit $50,000 in the first month and maintain that for three months, we give you $500 credit back to your account just-
Scott:	Oh, that’s awesome.
Kelly:	A token of goodwill and good luck. And on top of that, any amount that you bring to the bank that you want to set aside for a money market account, we are offering right now, obviously subject to change, given the market really competitive rates that are right now it’s at 5.258.
Scott:	Oh, wow. Maybe the highest I’ve heard of lately. That’s really good.
Kelly:	And that’s on any amount. So, we found like, “Oh, I can only give you thousand dollars, but I can’t find a good cash management solution for $10,000.” And we said, “Okay, let’s make sure that you can earn that amount regardless of how much you have.”
Scott:	That’s really smart. We have clients that have 500 K or a million dollars and $25 or $50 million.
Kelly:	It’s all over the map and we get it, and things fluctuate, and I think they’re always worried about setting aside large sums, especially in this economy. And so, we said, “Hey, if you’ve got $10,000, you can earn the same amount if you have a million dollars.”
Scott:	And money market accounts just for everyone, they’re pretty liquid. It may take a day or two, but they’re very, very liquid.
Kelly:	They’re very liquid. You see them in your online banking portal, you can transfer funds back and forth. So, if you need that cash, there’s no penalties. You can transfer it to your checking.
Scott:	Yeah. I love, by the way, you touched on something which I really love, which is being able to see it in the portal. Something about psychologically just knowing it’s there and also not forgetting about it. We have clients that forget about money in places and that’s actually a big thing.
Kelly:	That’s a big problem.
Scott:	Yeah, exactly. Good problem to have. And then what are you doing on the expense management side?
Kelly:	Yeah, so we are integrated with a bunch of different platforms like bill.com and others. It’s all in our online banking.
Scott:	Awesome. And then you have a credit card. When I say expense manage, I kind of mean credit card.
Kelly:	Oh, credit cards. Yeah, sorry. Different verbiage for us. So, we just launched a startup specific credit card last month. So, another pain point that we heard a lot from early stage startups was, “Hey, do you guys have a credit card that makes sense for somebody who doesn’t have credit history, that doesn’t want to provide a personal guarantee?” Because it is hard when you’re that early to get almost like your introductory lending relationship with a bank. So, we created an unsecured, no personal guarantee, no credit history needed credit card for early-stage startups that’s purely based on their deposit balances.
Scott:	Awesome.
Kelly:	For example, if they have a hundred thousand dollars in their checking account, they’re eligible for up to a $20,000 credit limit. So, the deposits need to be about five times what their credit limit’s going to be. And so, we check it on a quarterly basis. So, all of a sudden we understand things fluctuate in their checking accounts. So, one day they may have less and it may drop below that a hundred thousand dollars, we’re not going to just cut them off. Again, it goes back to that relationship component of let’s get on the phone and have a conversation and make sure that-
Scott:	And for the Kruze clients, they raise venture capital, so they’re going to be totally fine on that stuff. Because I think-
Kelly:	This is more the pre-seed, typically that’s where, because you do, you get some that are like, “Hey, I just need a $10,000 credit card limit and that’s it.”
Scott:	But the personal guarantee, not having that is huge. I always tell the story, but Vanessa and I were on vacation in, this is pre baby, so five or six, seven years ago, and I remember talking to one of our clients who was shutting the company down, and I just happened to be like, almost forgotten to ask. I was like, “Hey, do you have any credit card debt?” And she’s like, yeah. I was like, “Is it personally guaranteed?” She’s like, “Oh my God, it is.” And it waslike 25,000 bucks and they were shutting the company down tomorrow. And I was like, “You need to pay that right now.” But that’s the kind of thing that happens and people get caught or they can’t get a big enough credit card. Most people who start companies don’t have a lot of money. I mean, I know when I joined Vanessa, we were basically broke both of us, and it was like, “Wait a second, I don’t have enough money for you to give me a good credit card to run the business expenses through it because I don’t have a lot of credit history” and things like that. So that’s super beneficial in both those ways. I think that’s really smart.
Kelly:	And it’s utilizing a traditional credit card, our Visa commercial plus card. So, they still earn rewards. There’s still cash back. It’s virtual cards that they need it for their team members. So, it has all the traditional components of a regular credit card, it’s just kind of how it’s underwritten slash not underwritten because it’s unsecured.
Scott:	Yeah, that’s awesome. Good for you. That’s great. And then how does the coverage work with the relationship? Are people assigned a banker or is it like, “Hey, when I have a problem, I call in?” How’s all the high touch customer service work?
Kelly:	So depending on their location, they’ll get assigned typically one or two people as their team, and those are their people. We have a 1-800 number of course, like every bank does, but we want to make sure that they know to come to us first. And that is not only in regards to, “Hey, I forgot my password. I can’t log in.” Of course, that sort of stuff. But we also want them to come to us for things that are outside of banking, like ecosystem stuff. A lot of times they’ll come to us and say, “Hey, I’m hiring. Do you know a payroll provider that we can work with?” Or, “Hey, I need an accounting partner. I’m looking for something like that.” And we’ll make ntroductions of course, where we can. And we also have a lot of partners that are part of what’s called banking with benefits that like you guys, that we’re offering some sort of discount specifically to our clients. So, we want to make sure that we’re involved in a lot of different aspects of their-
Scott:	That’s awesome. You also know the company, so you can give custom advice, which is really important. You’re not going to send them on a wild goose chase. That makes a really, really big difference. That’s great. And the fact that you’re serving companies nationally, wherever they are is really nice because sometimes some of the other banks who are very regional focused, they can’t serve that company in Michigan or wherever because they don’t have an office there. And so, there’s no one who actually knows how to talk to those companies. So that’s really, really cool.
Kelly:	I mean, we even work with companies that are moving here from overseas. The founders may be still in the UK or India, and they’re going to be a part of a YC and they’re opening their accounts here to get started because they’re moving, and we understand there’s different needs for founders that are outside the US. So, we do work with founders.
Scott:	I love that too. And we are seeing more and more companies like that, who are Delaware C corps, but really the founders are in Europe or Australia or South America, so that’s really great too. That’s awesome. And I can personally attest to, you guys do a great job. The relationships are real. You’re there. You’re always there when we need to talk to somebody. And I know integrity wise is really important for us too. And I think one of the other nice things, I referenced the SVB crisis a little bit, but you and Mike were available during that time. I mean, I think we sent you a bunch of clients during that time, and whenever we had. That was maybe the craziest 10 days in my career in a way, and you guys picked up the phone and answered emails and were super helpful. So, we really appreciate that.
Kelly:	Yeah, no, and we appreciate your partnership as well. And for us, it’s always, we want to make sure that our clients are taken care of. We do take it seriously. And like I said, for us it’s not necessarily, especially on the early-stage side of things, it’s not just like a 12 month, we just want to get you onboarded and forget your name and stuff. We want to grow with you, and that is in some cases, or you’re utilizing a chatbot. It’s like, “No, I want you to know who I am and be comfortable reaching out to me. I want to know who you are, because at the end of the day, if you’re successful as my client, we’re successful.”
Scott:	That’s totally it, right? You’re so aligned, you’re completely aligned. If they’re more successful, it helps you guys too. And so, I love that. And the same with our business too. It’s like, “Well, we want to answer those questions because we know it’ll help you out, and that is good for us.” That’s amazing. Any good banking horror stories, I’m sure it’s like us where you have companies coming from another bank or for us in an accounting firm and you’re like, “What happened? What’d you do? What did they put you on?” Kind of thing. Have you seen any just horrible, horrible things that people should avoid?
Kelly:	I mean, again, I think do your due diligence. I think there’s been plenty of times where from credit cards being, people would getting shut off because they dropped below certain limits or something like that, and we’ve had to rush to get them because they had to pay off something or transferring funds from another bank when they’re moving over and not realizing that there’s fees associated with that on the other side of the other bank. So, stuff like that. I think again, t’s just doing your due diligence of making sure the solutions you’re picking actually support your business now and into the future. I can’t stress that enough because again, it’s easy to get caught up in what’s available now, and if you think you’re busy as a pre-seed founder, you’re going to be even more so when you go to raise your series A. So having the right team behind you is key.
Scott:	I totally agree. That’s really well said. Well, maybe you could tell everyone how to reach out, how to get in touch with you, how to get in touch with Bridge Bank, LinkedIn, email, all that kind of stuff?
Kelly:	Yeah, absolutely. So obviously everybody can reach me. Just I think maybe Scott, you’ll share my email address, but it’s Kelly.Caviglia@bridgebank.com. You can access more information about our startup program on bridgebank.com startup page, and then obviously at LinkedIn, anybody can message me if they have any questions.
Scott:	Awesome. Well, thank you Kelly. Thanks for everything you do for the Kruze clients.

Bridge Bank offers important services to startups

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