Like many other large companies, SVB has begun working to diversify its offerings outside its core — financial services for fast-growing startups and venture capital firms. It has recently built Pioneer Mind, a platform focused on the mental health and wellness of startup founders and investors; Bolster, a marketplace for senior executive startup talent; and several other ventures.
Boris Pluskowski, who serves as Head of New Ventures at SVB, sits within the innovation team, which he said has two major sections — incubation and new ventures. The innovation team works on spinning out new ventures, fostering internal development, building partnerships, making strategic investments, and more. Founded in 1982, SVB has offices in the US, UK, India, China, Israel, among other countries.
Pluskowski shared SVB’s team structure and addressed the challenges of new venture creation in a recent interview.
A Two-Pronged, Venture-Building Innovation Team
“The innovation team, broadly, is split up into two sections — there’s incubation and new ventures,” Pluskowski explained. Both of the teams play roles in helping new concepts come to fruition.
The incubation team is responsible for clearly defining the opportunity, Pluskowski said.
“The incubation team is in charge of trying to interview different client segments, understand their unmet needs, identify the white spaces within those needs, design businesses and concepts that fit those needs, and ultimately get those to a strong seed-level pitch — so nothing actually built yet,” he said.
Once the incubation team has completed those steps, the pitch goes up to SVB’s CEO and his team to consider it. If the pitch garners approval, Pluskowski’s team, the new ventures team, becomes responsible for it — and its path to revenue.
“You can think about us as the execution arm of the innovation team. What that means is that we take those ideas, those concepts and continue to build up the full operating model — we’re getting a sense of how much money it would take to get this idea to MVP, [coming] up with a few different scenarios of how we could fund it,” he said. “We then go and recruit a founding team to take over the concept, put together an investment syndicate for our VC partners to fund, and then, in the case of a new company, we incorporate the startup outside of SVB as its own separate entity.”
Are There Corporate ‘Role Models’ for Building New Ventures?
Pluskowski said that some industries — particularly pharmaceuticals companies and technology companies — have historically built strong capabilities for creating and launching new ventures.
…You almost want to end up looking more like a PE [private equity] company than you do a traditional commercial entity with a lot of interconnected business units.
But overall, he said, he sees venture studios and incubator companies as the models for best practices for building successful startups that have longevity. He sees his team’s work to be “part incubator, part [venture] studio, part accelerator, and part corporate innovator.”
“If I look at best practices, I’m typically looking more at venture studios and VCs with incubator arms [than at corporations],” he said.
He said he thinks the push to create new ventures will alter the path of many traditional companies.
“The tech companies, who have been doing this model for a long time… That’s the model we’re ultimately aiming for,” he said. “It’s not a conglomerate, but you almost want to end up looking more like a PE [private equity] company than you do a traditional commercial entity with a lot of interconnected business units,” Pluskowski explained.
Mitigating the Challenges of Venture Building
Pluskowski said a number of challenges come along with building new ventures, especially in a large, highly regulated company like SVB, with 7,700 employees and more than $200 billion in customer assets.
Those challenges include regulatory compliance, hiring the right talent for founder teams, and distribution.
Regulatory Compliance. Pluskowski said for SVB, which has recently reached Large Financial Institution (LFI) status, balancing venture creation and regulatory oversight can prove difficult at times.
“That [status] puts us in the too-big-to-fail type of model, which means that we now get a much more comprehensive amount of regulatory oversight than we used to,” he said.
For that reason, SVB has to be cautious about how it builds and how much equity it holds in the ventures it builds.
And, Pluskowski added, “We have to be very careful around not accidentally killing these companies by putting too much overhead on them.”
He said the innovation team engages its regulatory teams early on in the process of building new ventures.
“We have a regular ‘Operating Partners’ meeting where we try to engage our partners in legal, regulatory, compliance, risk, IT, privacy, and more, in understanding what our roadmap looks like, and the status of each of our portfolio companies as they inevitably start changing and pivoting to address the real world,” he said. “In addition, all of us undergo required regulatory training, and we have Business Risk Officers assigned to our division that helps us navigate the ever-changing landscape.”
Founders. One of the most important aspects of building a company is the talent working on it, Pluskowski said.
“That’s a key aspect of [venture building] — making sure that there’s not just product-market fit in the concept, but that there’s product-founders fit within the concept, too. “
He said, ideally, when SVB recruits founders, it asks them to undergo a three-to-five-year commitment to the startup — and wants to ensure that it selects founders with a deep understanding of, and passion for, the new venture’s concept and mission.
“We’ve evolved a robust hiring mechanism now to find founders. … [It tests] their desire and ability to lead something in this specific space; [determines] that they have a shared vision with us, where we’re all aligned in terms of what the long-term potential is,” Pluskowski said.
The melting pot is being created for the perfect storm of the next wave of phenomenal companies to be created.
Distribution. Pluskowski said he recommends considering distribution channels and required resources early on in the process, which helps to avoid major roadblocks in the future.
“Distribution is always a little bit harder than it seems at first. The theory of distribution and the practice of distribution are two very separate things,” he said.
When you’re asking the organization for distribution support, communications help, or other resources, Pluskowski said, “You should — where possible — make sure that you’ve done the legwork to think about everything from your path to the end client; the kind of messaging you’re going to be using; the overall benefit to the institution you’re looking to establish; how you’re going to incentivize sales teams — because this is always an addition to the rest of their work.”
A New ‘Golden Age of Startups’?
Pluskowski said he expects that a recessionary period in 2023 could mark a new era for startups.
“Historically, every recession has always ended up shepherding in a new golden age of startups,” he said. “People get laid off — what do they do? They go off and they build startups because they can’t [or don’t want to] find other jobs. … The melting pot is being created for the perfect storm of the next wave of phenomenal companies to be created.”