Saas · Banking

What are the best banks or financial institutions for SaaS in California?

Alper Cakir

March 25th, 2016

Our SaaS product Xtensio is gaining traction (30K users and growing) and we're ready to turn on basic monetization.

What are your recommendations for the best bank?

Thank you for all your feedback,

Sachin Agarwal Founder, Braid (braidhq.com) - lightweight project and client management built into Gmail and Google Apps

March 28th, 2016

We went with SVB.  If you ask, they'll waive all fees for a year.

Peter Jordan Revenue hacker for startups - journey to the $1 of revenue

March 25th, 2016

Not sure where you are located but I am in San Jose and I have looked at Chase(JP Morgan), Wells Fargo and US Bank. I ended up using Chase. US Bank came in second and Wells came in last because the login for both personal and business accounts is the same. For bookkeeping and organizational reasons I like to keep these accounts separate.

Don Ross Managing Partner Digital Health at Life Science Angels

March 25th, 2016

It really depends on the level of service and type of relationship that you will need. 

Basic - deposits, check writing, etc. - all done online. You can shop for the best fees and user interface. 

Need financing (loan) in the future - it's important to establish a personal relationship. Note: typical AR (accounts receivable) financing is not available for SaaS companies. In the typical AR situation, a company has delivered the product/service and has billed the customer. The bank essentially "time shifts" funds by loaning against the outstanding receivables and gets paid when the customer pays (sometimes directly). In a SaaS model, even though you may have long term contracts, you are paid upfront (perhaps monthly) and then you deliver the service. There are no receivables to finance. 
Still, some alternative lenders have figured out how to financing SaaS contracts. Sand Hill Finance was one (now part of Square One Bank). 

At the next level is the possibility of venture debt. Then, you want a relationship with a bank that has a venture/startup department. Silicon Valley Bank, Square One Bank, Bridge Bank are the big three (and I see that City National Bank is active in venture financing). This list undoubtedly is incomplete. Note: venture debt generally is issued based on the VC's relationship with the bank, not yours. But it doesn't hurt to have a pre-established banking relationship. 

I've just hit the surface, but hope this helps.  

Alper Cakir

March 25th, 2016

Thank you for your answer Peter. I believe I need to clarify it a little, my bad:

We are already set for the payment processor, we'll be using "Stripe". My question was regarding regular banking practices. Is one bank better than the others in terms of fees, customer service or being friendly with startups, etc?

Peter Jordan Revenue hacker for startups - journey to the $1 of revenue

March 25th, 2016

The choice of banks does not really matter. Assuming you are monetizing your SaaS product via credit card transactions, you need to first pick a company like Strip. They do not care what bank you use for your business account.

Alper Cakir

March 27th, 2016

Thank you Peter, Ron, Donald...very helpful.

Ronald Burr Chief Product and Technology Officer at PADI

March 25th, 2016

Bridge Bank in Palo Alto is very tech focused and understands SaaS. Also SVB is good. There is some talk that these banks are beginning to recognize booked SaaS contracts (or bookings) as an asset and will allow some % of leverage when getting debt or operating lines of credit. Often depends on your investors, age of your company, churn rates and contract wording.

Vanessa CPA Startup CFO Consultant

September 1st, 2016

I work with over 150+ startups and just about every bank out there.  Here are the trends that I've noticed:
  1. Silicon Valley Bank: best for VC backed startups and my top recommendation.  You may even be able to negotiate a free 409A and more favorable venture debt terms if you bank here.  Our VP Liam Fairbairn takes veeeeeeery good care of startups; find him here: LFairbairn@svb.com.
  2. Wells Fargo: best for bootstrapped startups and small businesses.  This is where I park my business' money, largely because I have a great relationship at our local branch with Judy Castillo (judith.castillo@wellsfargo.com).  She's a saint.
  3. First Republic Bank: best for personal banking and by far the best customer service.  Caveat: great for personal banking, NOT business banking.  Basic reporting is a pain... and we often tell our startups that if they're using FRB as their business bank, their bill will be +20% higher because it takes much longer to extract basic info :(. 
Hope this helps!