Live Oak Bank is growing in a new direction.
The Wilmington-based bank has entered the arena of venture banking, meaning that it will begin offering financing and banking support to early-stage and expansion-stage venture-backed companies.
“Live Oak is an entrepreneurial company that focuses on technology and customer relationships, and we feel that entering the venture banking market is a natural extension,” Live Oak Bank President Huntley Garriott said in a news release Monday. “We’ve assembled a terrific team that is well versed in venture banking and are excited to support growth opportunities for entrepreneurs.”
That team, led by Pat Scheper, will look for companies that have successfully grown through the equity investment phase of their young lives and are now ready for venture capital loans, Scheper said Tuesday. In considering a potential loan, the Live Oak team will assess the quality of both the initial equity investors and the quality of the company itself, he added.
Some of those venture capital loans will be annual. Others could be for as long as three to four years. In any case, the Live Oak venture banking team will play a consultative role with borrowers and develop long-term relationships with them.
"Our goal is not to do a single transaction, but to help the company along its life cycle," Scheper said. "There will be monthly or quarterly monitoring because the company is fast-changing and fast-growing. That's where our experience matters. We want to make sure we're making the right decisions, and making loans we feel comfortable with across the life cycle."
To make sure that Live Oak's venture banking segment makes the right deals to begin with, officials hired Scheper, who has spent the past almost-15 years in venture banking and venture financing, first with Square One Bank and most recently at Silicon Valley Bank. The balance of the team will consist of two senior lenders and two portfolio managers, Scheper said. The team's credit partner, Washington, D.C.-based Anthony Raley, will help the team scout for potential deals and will assist in vetting them.
In evaluating potential lending opportunities, Live Oak will give primary consideration to companies in industries it understands best, including financial technology, health care information technology, health care services and business-to-business software, according to Monday's release.
"We'll place a strong focus on those industries," Scheper confirmed.
And, although Live Oak will lend nationally, it will look for good opportunities closer to home, realizing that there are many strong startups outside of Silicon Valley and other entrepreneurial hot spots.
"We would like to make more money available in this region; to find opportunities in our own back yard," Scheper said, mentioning the fact that Wilmington, the Triangle and other places in the Carolinas are home to many startups. But, he cautioned, any potential borrower must fit the model of exhibiting high growth and having a strong equity financing foundation.
Scheper said that Live Oak Bancshares CEO and Chairman Chip Mahan, as well as Garriott and Live Oak's chief credit officer Steve Smits, are all very involved with the launch and future direction of the new lending unit, a factor that Scheper said is "very important" to him.