VCs see SG as ‘stronger haven’ for startup capital after SVB fallout

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Despite most Southeast Asian startups having limited or no exposure to Silicon Valley Bank (SVB), VCs in the region remain cautious about the potential impact.

In a Linkedin post by founding partner Vinnie Lauria, Golden Gate Ventures said that a number of VC firms in Asia – including itself – have banked with SVB. However, the company said it saw less than 1% of its funds affected by the crunch.

“Typically, VCs have minimal funds in our bank accounts; we prefer to put it to work by investing, or leaving it with the LPs [limited partners],” Lauria wrote. “Startups and anyone else in Asia should brace for more financial impacts.”

However, he still suggested that startup founders in the region should inform their investors whether their companies were exposed or not, and “gauge their sentiment of the markets” for future fundraises.

Yinglan Tan, founding managing partner at Insignia Ventures Partners, notes that these collapses will boost acquisition momentum and affect the buying or investing power of certain companies and funds.

“Given the already global appeal of Southeast Asian startups, the growth-stage fundraises, secondary sales, acquisitions will be impacted depending on whose ties to the collapsed banks are impacted,” he adds.

The situation, however, might present Singapore with an opportunity to become a stronger “haven” for startup-focused capital and talent in the coming years, according to Tan.

Jeffrey Seah, partner at Quest Ventures, also expects that some funds will move to more reliable and capitalized banking institutions, such as those located in Singapore. For some tech startups, “this can be a positive accelerated journey of business maturity and adopting mainstream mindset in treasury management,” he adds. “It cannot come sooner for some.”

Hero Choudhary, managing partner at Beenext Capital, said one major lesson for startups – including those from Southeast Asia – is to “bank with big banks” and understand risks associated with other parties, which include banking partners, vendors, suppliers, customers, among others.

The Monetary Authority of Singapore (MAS) said today that the city-state has minimal exposure to these failed US banks. However, the regulator is working with Enterprise Singapore to assess any potential impact on Singaporean startups, including those that operate in the US.

In latest development, HSBC said it is acquiring SVB’s entity in the UK. In the US, JPMorgan Chase and PNC Financial Service Group are among the potential buyers.

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