With SVB Now Done. What’s the Impact for Canadian Tech?

Betakit | Meagan Simpson and Douglas Soltys | March 10, 2023

Image: Unsplash/Koen Emmers

With news breaking Friday that the SVB bank has been closed by regulators, which have taken control of its deposits.  This dramatic and quick downfall for one of tech’s most prominent financial institutions is likely to have cascading effects across not only Silicon Valley but Canadian tech.

• Canadian startups that have their US banking with SVB, or ostensibly Canadian companies that are legally domiciled in the US for tax purposes and use SVB, will be impacted by the bank closure.
  • Numerous Canadian startups used SVB for their US bank accounts. “They were much more reasonable on rates and faster to help them than Canadian banks in the USA,” the VC said.
• In Canada, SVB plays a different role, as it does not have a banking license and only provides venture debt locally. As such, unlike their American counterparts, Canadian-domiciled companies likely won’t have their funds with the bank.
  • SVB’s downfall could also create a “credit crunch” here.  The shutdown potentially eliminates one pool of capital Canadian startups have relied on during the downturn.

See:  US Government Closes Signature Bank and Moves to Stop Potential Banking Crisis

“For the sector, the repercussions aren’t entirely knowable at this stage,” McQueen wrote. “Entrepreneurs will have a harder time raising debt, at least temporarily. LPs will frown, for sure, which could make it harder for VCs to raise their next fund. The risk managers at competing banks will conclude what they’ll conclude, but SVB will no longer be easily held out as a proof-point of the appeal of lending to the innovation economy, even if this crisis had nothing to do with the credit quality of SVB’s loan book.”

Continue to the full article --> here

The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

Share for a Chance to Win FREE #FFCON23 Virtual Event Tickets!! As a part of the lead-up to this exciting event, NCFA will be holding a social media contest for the chance to win FREE tickets to attend. In order to be entered to win, all you’ll need to do is share any of our event posts or create one of your own through your Facebook, Twitter, Instagram or LinkedIn personal or company page, tag @NCFACanada, and use #FFCON23. Winners will be contacted prior to the event. We look forward to seeing you there! Support NCFA by Following us on Twitter! Follow @NCFACanada