Ian Langworth

Jan 11, 2022

Choosing a Bank for Your Startup

One of the earliest decisions you need to make when starting a company is choosing a bank. This is yet another decision you have to make in the company's early stages which is both annoyingly mundane but also instrumental in how you set up your company's operations.
A good business bank should not be exciting. A good bank should simply Just Work and not get in your way. Sure, a checking account is just a place to put cash (or "working capital" if you want to get technical), but you also need convenience. You need a good mobile app, great security, helpful customer service, easy wire transfers, and you don't want to be bothered with trivial fees. And if you have co-founders or admins, you'll need good user-management to set up an approval process.
When we started DM we chose a large, institutional bank: First Republic Bank. Being based in the Bay Area, I had used Silicon Valley Bank (SVB) in the past and I was unimpressed with their antiquated platform and transfer fees, so I was desperate to try anyone else. Unfortunately --- spoiler! --- this turned out to be a mistake.
At first, First Republic appeared to have all of the above requirements, but it ended up being a disaster. They didn't offer credit services so we had gone with Brex, and connecting our checking account with Brex took over a week because they had to set up a separate read-only corporate ID and login. Their mobile app stopped working. We had repeated trouble logging in. And their web interface was so esoteric and confusing that it was almost impossible to send a simple wire transfer. We needed a change.
We explored three options:
  1. Mercury, which touts itself as "banking built for startups." Indeed, they have a slick-looking interface, and I've talked to plenty of customers that only had good things to say. But Mercury is really a wrapper on top of SynapseFI, a white-label banking backend provider, and SynapseFI is really a wrapper on top of a few other banks. By using Mercury, we would be separated by three degrees from our actual banking partner, and this gave us pause. There's also the fact that Mercury is a much newer product, and we were more inclined to choose a bank that was more established.
  2. Brex began as "the credit card for startups" but recently began offering a banking solution, Brex Cash. They also feature a slick user interface, and having used them for credit I can also attest that their support is top-notch. However, Brex Cash also seemed pretty new at the time we were setting up the company. And like Mercury/SynapseFI, they're not a bank, so you're a degree separated from their actual banking partners.
  3. Silicon Valley Bank, after a suggestion from a friend, has made tremendous strides with their new SVB Go platform. SVB Go has a great user interface on both web and mobile, and they are clearly designed for fast-moving founders with startup-like requirements. Setting up transfers and recipients is a breeze, and you have all the support you'd expect from a veteran bank. They work with any Plaid- or Yodlee-backed application like Brex or Tiller. They'll even issue you business credit cards too.
As much as we wanted to test out the newer offerings from Mercury and Brex Cash, we wanted to reduce the likelihood of Bad Things happening with a newer service, such as unexpected downtime, user interface glitches, or strange policies that lead to unexpected behavior. When you're a fast-moving early startup, sometimes you need to make a payment as soon as possible, and we wanted to make sure that nothing would get in the way. We also wanted to let our investors know that their investment was sitting in some place reliable.
After a lot of deliberation we switched to SVB Go, and my only regret is that we didn't use them from the beginning. Getting started was a breeze, and their onboarding team was terrific. I've set up domestic, international, and recurring transfers with ease. Every part of the UI has been thoughtfully designed, and their customer support has been astounding. SVB Go is easier to use than my personal bank!
SVB also gave us business credit cards, too. This is useful because we always want to pay for products and services using a credit card in case there's a dispute. However, their expense reporting isn't as advanced as Brex's, and since we already had a good Brex expense workflow going we decided to stick with Brex's credit cards. However, it's been a pain to have to constantly wire money from SVB to Brex to keep the balance up, so this is something we'll revisit in the future.
If we were starting over again, I probably would choose SVB Go from the very beginning, maybe even for both banking and credit. But with SVB and Brex, I feel confident that we have the tools we need to grow.