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"Trust Me"

Lending Problems

What's Next?

But what happens when tech firms become the mainstream? That's the question of the hour, admits Harry Kellogg of Silicon Valley Bank in Santa Clara, California, who hopes his bank's lead time in the market will give them a strong leadership role should the big boys decide to move in.

And what about lending to non-venture-backed companies? That just doesn't seem to be in the cards, experts say. One of the main reasons for this goes back to the very nature of banking as a highly regulated industry, under even more scrutiny since the savings and loan bail-out in the 1980s. Another consideration is that some bankers don't have the expertise to evaluate the long-term profit potential of high-risk businesses.

So, if you plan to start or have already launched a high-tech company, your best bet for financing remains yourself, your friends and your family. Probably the most bankers will be able to do is refer you to a venture capitalist or an angel. But if you're clever enough to grab the attention and money of private investors, then cracking open bank vaults could be just a matter of time.

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This article was originally published in the May 2000 print edition of Entrepreneur with the headline: "Trust Me".

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