For many tech companies, choosing a bank ranks low on a long list of priorities. If the right banker is not selected early and with careful thought, however, unforeseen business challenges may arise.
Your banking needs might be working well enough for now, but when your business starts to grow, manual processes such as billing, remittance processing, and reconciliation can place pressure on your employees and company. It’s important to find a financial institution that can help alleviate that pressure from the beginning — a team that anticipates and prevents roadblocks, rather than treat them retroactively.
To vet the process and reduce headaches down the road, here are four questions to ask your potential banker:
- Do you have a dedicated technology practice? You need a team that has experience with the tech industry, or has access to others within the organization who can provide specialized guidance. Similarly, gauge whether your prospective banker has key contacts in the community relevant to your company — that web of influence may benefit you down the road. Also, make sure your bank has experience serving tech companies of all sizes.
- What about investment banking and equity analyst coverage? Another advantage of working with an experienced team is that they are capable of introducing you to an investment banker — someone with expertise in your particular vertical within the tech sector and who can provide valuable market insight, peer benchmarking, and industry analysis as you move toward your ultimate goal of selling your company or taking it public. Some banks also perform equity analyst coverage. Make sure you are working with an institution that provides a suite of such capabilities.
- What tools and system features do you offer? In the beginning, you may only need a bank account. As you grow, however, you need a banking team that can grow with you. Work with an institution that can help you efficiently manage your business and provide features such as a treasury management platform that’s scalable, fully customizable, and integrates well with third-party applications and enterprise resource planning (ERP) systems.
- Do you offer direct technology investments? If your company is focused on fintech, data security, or cybersecurity, be aware that financial institutions are looking for your expertise. Some banks, such as Wells Fargo, offer mentoring programs that can help accelerate your business. This can include a small equity investment and an assigned banking mentor who can provide guidance for a period of up to six months. It’s a win-win for you and the bank — the bank gets exposed to your technology and may decide to license it or potentially acquire your company. Beyond accelerator programs, some banks also make direct financial investments, not just strategic, into later-stage tech companies.
In summary, find a bank that can grow with you and provide near- and long-term services to help you reach your goals.
The views expressed present the opinions of the author on prospective trends and related matters in middle market banking trends as of this date, and do not necessarily reflect the views of Wells Fargo & Co., its affiliates and subsidiaries.
INVESTMENT PRODUCTS: NO BANK GUARANTEE • NOT FDIC INSURED • MAY LOSE VALUE All transactions are subject to credit approval. Some restrictions may apply. © 2019 Wells Fargo Bank, N.A. All rights reserved. Deposit products offered by Wells Fargo Bank, N.A. Member FDIC.