CIBC to Double Venture-Lending Unit’s Staff as Startups Boom
(Bloomberg) -- Canadian Imperial Bank of Commerce is planning to double the staff of its innovation-banking unit in the next year and a half as a boom in the technology industry boosts demand for venture lending to startups.
The business is opening an office in London, bringing its total locations to 12, Toronto-based CIBC said Monday. CIBC Innovation Banking, which was established when the bank bought venture capital lender Wellington Financial in 2018, also has offices in New York, Boston and Menlo Park, California, among other cities, and currently has a team of about 50.
CIBC is expanding the unit as the pandemic accelerates the growth of technology companies, particularly in the software and life-sciences segments. Mark McQueen, who heads the business and led Wellington when CIBC bought it, said the move to the bank has helped the business meet that flood of new demand and should aid its efforts to continue bulking up its staff.
“We’ve kind of been preparing for 20 years for what is now the best market in our lives,” McQueen said in an interview. “We have the benefit of being entrepreneurs inside a very strong organization, and that appeals to people from outside our bank who would love to do a startup. The fact that CIBC has been doing this for three and a half years on the back of Wellington’s 18 years of experience gives us the best of both worlds.”
CIBC Innovation Banking pitches its venture-lending service as way for startups to raise money while preserving current shareholders’ equity and increasing their valuations. Impaired loan losses on the unit’s portfolio have been trending below 10 basis points a year over the past three years, according to a presentation last month.
The innovation banking unit has had a compound annual growth rate of 98% over the past three years and now manages about C$5.4 billion ($4.3 billion) of funds. CIBC is seeking to capture a bigger share of lending, rather than equity, transactions, McQueen said. The North American venture capital market sees about 8,000 equity financings a year, while CIBC Innovation Banking completed about 80 loans in the past 12 months.
“The market opportunity for CIBC in this space is massive,” McQueen said. “For us to be able to continue to grow within that market requires adding people and offices, which is what we’re doing.”
In conjunction with the new office, CIBC appointed Sean Duffy, formerly of Barclays Plc, as a managing director.
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