As a result, traditional institutions have changed as well. Banks are no longer just banks - they are financial institutions that offer customers a range of products and expertise that would have been unfathomable several years ago. In an attempt to provide venture investing services for large institutional and commercial clients, many banks are acquiring the means to join the fray. Banks need to provide these opportunities for their large existing clients. In neighboring Pittsburgh, the city's two largest banks, Mellon Bank Corp. and PNC Bank Corp., set up subsidiaries to handle venture capital duties.
Banks view the opportunity to invest early as a chance to get involved at a company's growth stage.
Then as the business matures, the bank develops into a permanent fixture in its long-term financial planning and strategy. However, the downside for traditional financial institutions is that as publicly traded companies, an abundance of early-stage investments may spook shareholders. Today's financial institutions want to be full-service sources of advice and capital at all stages of evolution and development. Meanwhile venture capital firms, the major source of financing for young companies, have experienced tremendous growth because of the wired world. Venture capitalists are able to help on a number of levels.