The immediate fallout will be the inability of up to half of all venture-capital firms — primarily small to midsize companies — to raise their next round of funding. That’s why some are characterizing those firms as the living dead.
The bank’s implosion exacerbates cracks that had already been forming in venture funding and that will linger for at least two years, a dozen leaders in the venture-capital field told MarketWatch in a series of interviews. This, they say, will lead to dark days for startups that need funding, a change in the relationship between venture-capital firms and founders, and a rise in so-called zombie VCs.
With a large percentage of VC firms struggling to raise capital, startups that need funds could soon be lurching around Silicon Valley as well. Venture-backed companies were already facing a capital crunch after market volatility forced investors to slow deal-making and set higher benchmarks for financing — and now startups’ debt-financing options have also taken a hit, according to a recent PitchBook note.
“The lack of access to venture debt forces companies to raise equity financing sooner but under less favorable conditions,” Brian Lee, vice president of the intelligence unit at CB Insights, told MarketWatch. “The cost of capital for startups is going to go higher, both in equity and debt,” said Miguel Fernandez Larrea, the CEO of Capchase, a fintech company that assists startups in finding growth capital without watering down their capitalization tables — charts used by startups to show investors’ ownership stakes in the business. He said he considered SVB a “frenemy,” because his company both worked with the bank as a client and competed against it.
The startups that are expected to be most affected are consumer financial-technology, or fintech, companies — the next wave of companies like Block Inc. SQ, +0.23%, SoFi Technologies Inc. SOFI, +6.12% and PayPal Holdings Inc. PYPL, +2.08%. SVB’s clients account for 71% of all fintech initial public offerings since 2020.
Also read: $142 billion in 2 days: extent of SVB bank run comes into focus as U.S. regulators mull new rules
Brasil Últimas Notícias, Brasil Manchetes
Similar News:Você também pode ler notícias semelhantes a esta que coletamos de outras fontes de notícias.
Esalen instructor talks about why Silicon Valley comes thereI'm an instructor at the Esalen Institute, a famous wellness retreat near Silicon Valley. Here's why tech executives flock to this oasis of 'transformation.'
Consulte Mais informação »
Silicon Valley Bank’s risk model flashed red. So its executives changed it.Silicon Valley Bank's rapid growth raised internal concerns that were overshadowed in a culture of executives driven to deliver profits, former employees say.
Consulte Mais informação »
Towering Monument Valley buttes display sunset spectacleA sunset spectacle featuring towering rock formations that resemble mittens played out this week at Monument Valley on the Arizona-Utah border
Consulte Mais informação »
Things to do: Skagit Valley Tulip Fest, UW Cherry Blossom Fest, Mariners & Mermaid FestLooking for something fun to do in the Puget Sound area this weekend? Check out these spring festivals, sports games and shows! FOX13
Consulte Mais informação »
Photos: Towering Monument Valley buttes display sunset spectacleA sunset spectacle featuring two mitten-shaped rock formations played out this week at Monument Valley on the Navajo Nation along the Arizona and Utah border.
Consulte Mais informação »
Unfounded Active Shooter Reports at Fashion Valley Mall in San Diego Forced Shoppers Into HidingBREAKING: Now-unfounded reports of an active shooter Friday night at the Fashion Valley Mall sent shoppers running into stores to hide at the direction of scrambling law enforcement personnel.
Consulte Mais informação »