SVB Invests $3M in Startup Institute as Financial Firms Back Techies

Banks and financial institutions are getting deeper into the startup world—now by investing in them at an early stage. Silicon Valley Bank has led a $3 million Series A funding round for Boston-based Startup Institute, which is looking to expand globally.

Previous investors in the company include seed-stage firms Project 11 and Boston Seed Capital. From what I hear, the structure of the Series A round is equity, not debt financing, which is what Silicon Valley Bank is better known for. Startup Institute and SVB did not respond to requests for comment last month.

Startup Institute (originally called Boston Startup School) runs business-education programs in Boston, New York, Chicago, London, and Berlin, for people interested in entrepreneurship and working at startups. The company is led by CEO Aaron O’Hearn and his co-founders Shaun Johnson, Reed Sturtevant, and Katie Rae. Sturtevant and Rae also lead Project 11.

Founded in 2012, Startup Institute is in the vanguard of young companies trying to reinvent how people learn entrepreneurial skills and how businesses find and train talent—see also efforts like Intelligent.ly, General Assembly, and Startup Weekend. It’s all part of a broader movement to remake higher education and job placement services.

Nationally, Silicon Valley Bank has led numerous debt financings and recently invested in Series A or B rounds for TouchOfModern, 6Sense, Metacloud, and other startups. And SVB Capital, a separate venture investing organization of SVB, has invested in companies such as Scribd, Nebula, and DiVitas Networks, according to CrunchBase.

As far as I know, Startup Institute is the first Boston company that SVB has made a strategic investment in, though the bank has many local startups as customers. Its investment in Startup Institute signals a way to get closer to more entrepreneurs, and to get plugged into the startup community and build relationships at an earlier stage.

Big financial firms like SVB, Fidelity Investments, and T. Rowe Price have become part of the startup funding story in Boston and other cities—see Fidelity’s recent investments in Uber, Dropbox, and Pinterest—along with traditional venture capital and newer seed-stage funds. Throw PayPal into the mix too, with its Start Tank incubator in Boston, and it’s clear financial services companies want to be more directly involved in the tech-startup phenomenon.

Gregory T. Huang is Xconomy's Deputy Editor, National IT Editor, and Editor of Xconomy Boston. E-mail him at gthuang [at] xconomy.com. Follow @gthuang

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