VC Bank’ Cashes Huge Check

Second quarter VC investment totals got an unexpected boost last week, when Square 1 Bank revealed that it raised $105 million in June.

The first-round deal is the sixth-largest venture funding of 2005 and should provide the Pinehurst, N.C.-based “venture bank” with plenty of capital to support satellite offices in Austin, Texas; Boston; Palo Alto, Calif.; San Diego; and Seattle.

No traditional venture firms participated, but about 70% of the $105 million came from finance-related institutions. The remainder was raised from high-net-worth individuals.

“It’s not a traditional funding round in terms of the actual investors, but it is in terms of its structure,” says Will Kelly, president of Square 1 East and a former principal with Ironside Ventures.

Square 1 will provide banking needs for venture firms and the IT and life sciences companies in which they invest. If that sounds much like Silicon Valley Bank or Comerica Bank, it’s intentional. The difference, Kelly says, is that those banks have grown too large to serve the smaller parts of their market. Square 1 only has 45 employees. CEO Richard Casey, who founded the emerging growth division of Imperial Bank, prior to its 2001 acquisition by Comerica, will run the bank.

Other executives include Jim Rutter, president of Square 1 Silicon Valley and former president of Comerica Ventures; Chris Wolley, president of Square 1 West and founding regional manager of Imperial Bank’s emerging growth division in the Pacific Southwest; and Susan Casey, chief credit officer who most recently served as a senior vice president of Comerica.