The company: True to its name, Silicon Valley Bank lends almost exclusively to early-stage companies in high technology and life sciences. But since its founding in 1983, it has extended its reach far beyond its California base.

"We're located literally everywhere there's a concentration of technology or life-science companies," says Kenneth P. Wilcox, executive vice- president and chief banking officer. With six additional offices in California and nine more across the country, Silicon Valley Bank serves about 4,000 clients in 40 states. A new branch in Rosemont, Ill. targets Chicago and Minneapolis, emerging areas in technology and venture capital. Even without a New York outpost, Silicon claims about 25 clients in Manhattan's Silicon Alley.

A wholly owned subsidiary of Silicon Valley Bancshares (SIVB), it has lent to E-commerce legend Amazon.com (AMZN), biotechnology companies -- such as Cygnus Inc. (CYGN), which developed a wristwatch that takes diabetics' glucose readings three times an hour -- and a host of software and communications ventures.

The goal: Silicon Valley doesn't need five years of operating income and three years of profits and financial statements before taking a chance on an entrepreneur -- it's one of a handful of banks that lends to start-ups and early-stage companies. Almost 80% of its loans go to companies that have yet to show revenue, let alone profits. That's because a company's business model, intellectual property, market potential, management team, and equity investors can outweigh profits or cash flow in evaluating loanworthiness, says Wilcox.

But it rarely takes a blind flier. Typically, Silicon lends to companies that have already received at least one round of equity funding from venture capitalists. But if a company shows enormous potential, Silicon might step in first. "Sometimes it's a way to help [a company] get started and bring it into our portfolio," says Wilcox.

More often, when untested entrepreneurs approach Silicon Valley Bank with an idea, it refers them to venture capitalists. "It's usually the case that the venture capitalists will put in their equity, and we'll put in our debt at the same time," says Wilcox.

Loans range from $100,000 to $10 million, at 1.5 to 2 percentage points above the prime rate. "We do all sorts of lending for early-stage companies ranging from secured lines of credit to asset-based lines. We do bridge loans, acquisition financing, factoring," says Wilcox. "At the pre-revenue, development stage, we would do working capital lines of credit and equipment loans." Silicon might secure its riskier loans with warrants.

The bank prides itself in its creative approach to meeting clients' needs. Last November, it purchased a $6 million royalty-backed annuity bond from Applied Science Fiction, an Austin-based developer of advanced digital imaging technologies. The bond is secured by future royalty payments that the Texas company expects through licensing agreements with Nikon and Kodak. Leveraging royalty income is common in the music industry, but it was a first for an early-stage technology company.

Not all the bank's deals turn out well, though. It announced in early March that three loans totaling $11.1 million were likely to be nonperforming. How will that affect lending practices? Wilcox said the bank is already tailoring loan structures more carefully to individual companies' risk profiles. For example, a company might now get funds doled out over time, contingent on meeting benchmarks, rather than all at once.

The typical deal: When Chris Rowen, president and CEO of Tensilica Inc., in Santa Clara, Calif., opened his first accounts with Silicon Valley Bank in the fall of 1997, he'd been working from his living room on a design for a flexible new microprocessor that manufacturers could readily adapt for digital cameras, cellular phones, office automation products, and other consumer electronics.

"I just started explaining [to Silicon] what it was we were trying to do," says Rowen. "They spoke a familiar language about start-ups and gave me a strong sense of support that what I was doing was in the mainstream. The bank's advice "was extremely valuable during the initial lonely stage of getting something off the ground," he adds.

By December, 1997, Rowen, who had been a vice-president of Synopsys Inc., a major design-automation software provider, had teamed with Harvey Jones, Synopsys' board chairman. Rowen and Jones kicked in $2 million to get Tensilica going. Another $300,000 came from members of their technical-advisory board. "We were the investors," says Rowen. They put together management and technical teams with an impressive list of experts in microprocessor architecture and design, advanced software development, and electronic-design automation.

In the winter of 1998, Silicon issued a $500,000 credit line to Tensilica -- what the bank calls a Quick Start loan. The loan didn't come with any "onerous liquidity covenants," says Rowen, which freed up other cash critical to Tensilica's growth. The loan allowed the company to purchase indispensable computers, furniture, and software, says Rowen.

Rowen says he talked with other banks, but Silicon "looked closely at me, the team, the backers, and went the extra mile. We did not have normal venture financing, but the fact that the company included some of the biggest names in Silicon Valley and not just generic 'angel' money put us in a category that Silicon was willing to deal with."

In June, 1998, Tensilica lined up $11 million in venture funding from Oak Investment Partners, Worldview Technology Partners, and Foundation Capital with "zero trouble," says Rowen.

Tensilica launched its product, the Xtensa Processor Generator and tool set, last month and already has two customers. It has grown to 35 employees from two in a year. Rowen won't reveal numbers, however, beyond saying: "We're not yet profitable, but we have significant revenues."

The process: Silicon Valley Bank doesn't look at many people right off the street. Most clients are referred by venture capitalists -- which means they've gone through a pretty intensive screening already. Silicon then sends out a "relationship manager." It looks at a business plan and financial statements, if there are any. It then surveys people who've collaborated with the company, customers, and investors. If everyone is copacetic, Silicon Valley Bank then puts together a financing plan and some nonfinancial help. "We might make introductions to companies that are similar and have similar interests," says Wilcox.

What works: Having a proprietary product that can't be quickly imitated and has a potential for a large market. It's a people business, says Wilcox, and the bank wants good references -- preferably from people it knows. If it knows your team or investors too, all the better.

What doesn't: An unrealistic view of your prospects, overconfidence, and lack of understanding of the give and take of business. Though most entrepreneurs Silicon Valley Bank sees have already been vetted by venture capitalists, some still mistakenly think their product is going to revolutionize an industry in a few years. "We like to have our own opinions," says Wilcox.

Parting advice: "Build the right team -- it really is what makes things happen."

By Karin Halperin in New York

To: LENDER PROFILES