What have you been seeing in your
area of the venture capital financing
market as of late?
It felt like we kicked off 2016 with
a bad hangover and some dour
sentiment in the marketplace. At that
time, we noticed that many VC-backed
companies quickly reduced expenses
and began to manage spending more
closely in their 2016 budgets. There
continues to be market uncertainty
over oil prices and the economies of
China and Europe, and much concern
about what is in store for this year in
the venture and tech communities in
Silicon Valley with the election and
interest rates.
Rod Werner
Senior Vice President,
Managing Director,
Technology Banking
City National Bank
Rod Werner is managing director of
City National Bank’s Technology and
Venture Capital Banking team, based in
Palo Alto with additional offices in San
Francisco, Santa Monica, New York and
Boston. He manages and leads a team
that provides venture debt and various
other financial services to companies
ranging from pre-revenue, venturebacked startups, to later stage and
profitable technology companies. For
more than a decade, he has worked
closely with the top venture capital
firms, actively assisting companies with
raising equity and debt. Rod has more
than 20 years of experience in banking
and commercial lending, with significant
expertise in serving technology
companies. He is committed to adding
value and leveraging his network to help
entrepreneurs be successful.
Los Angeles-based City National
Bank provides comprehensive banking,
investment and trust services through 75
offices in Southern California, Northern
California, Nevada, New York City,
Nashville and Atlanta. City National is
a subsidiary of Royal Bank of Canada
(RBC), one of North America’s leading
diversified financial services companies.
RBC serves more than 16 million personal,
business, public sector and institutional
clients through offices in Canada, the
United States and 38 other countries. For
more information about City National,
visit the company’s website at cnb.com.
However, it appears that market
sentiment has changed for the positive
recently. We find that clients and
investors are more optimistic than
they were a month ago. However, we
stress that companies should continue
to appropriately manage expenses
to extend their runway and focus on
growth drivers for the remainder of
2016.
The downturn in venture investment
and valuations has been the talk of
the town for some time now. Have you
seen an increase in founders turning
to venture lenders?
The market has been on a long, great
run since the Great Recession, but it
does go through cycles. I personally
have been here in the Valley through
the dotcom bubble and the financial
meltdown, and each time great tech
companies emerged during those
periods.
That said, we have observed valuation
pressure recently and equity capital
is taking longer to raise today than in
years past for most venture-backed
companies. The bar is higher and
entrepreneurs are concerned that the
equity funding will dry up—if not now,
then later this year. This results in more
companies proactively looking to raise
both equity and venture debt.
Yet at the same time, several of our
high-profile, fast-growing, disruptive
technology clients have successfully
raised large equity rounds this quarter.
Have you seen any material shifts
in City National Bank’s technology
lending activity from the end of 2015
through the first quarter of 2016?
What are the typical types of
financings you are conducting with
your team?
No. We continue to lend to fastgrowing, market-leading technology
companies that are backed by the
top venture firms in the U.S. Today,
we are one of the strongest financial
institutions in the U.S. For our clients,
it matters knowing we will be there for
them.
We provide venture debt, equipment
financing, recurring revenue and
general working capital lines of
credit and leveraged finance for fastgrowing, venture-backed and public
technology companies. We have
a wide range of clients, from prerevenue startups and early revenue
companies all the way up to late-stage,
Continue on to the next page for the rest of
the Q&A.
8
P I TC H B O O K 1 Q 201 6 U. S . V E N T U R E I N D U S T RY R E P O R T