Southeast Asian VC firms have been more affected by the SVB downturn than startups

  • Although SVB serves tech startups and venture capital firms, some Southeast Asian-based VCs – such as Jungle Ventures and Golden Gate Ventures – mostly based in or based in the US – have also been clients of SVB.
  • Many VC firms in Southeast Asia may face challenges in finding another bank that offers similar products to the collapsed SVB, say venture capital firms in the region.
  • “Really, it’s because the local banks don’t offer the same product and services that SVB does,” David Gaude, managing partner of Jungle Ventures, told CNBC’s “Squawk Box Asia.”

SINGAPORE — Compared to startups, venture capital firms in Southeast Asia are likely to see a bigger impact from the collapse of Silicon Valley Bank, as replacing a US-based bank in the region will be challenging.

“From a VC firm’s perspective, I think you’re going to see a big impact here,” David Gowde, managing partner at Jungle Ventures, told CNBC’s “Squawk Box Asia.”

“Actually, this is because the local banks do not offer the same product and services as SVB,” Gaude said on Tuesday, adding that SVB is Jungle Ventures’ flagship bank.

Although SVB serves tech startups and venture capital firms, some Southeast Asian-based VCs – such as Jungle Ventures and Golden Gate Ventures – mostly based in or based in the US – have also been clients of SVB.

The bank provided VC firms and startups with access to the US capital market and networking opportunities in the US

Stock picks and investment trends from CNBC Pro:

SVB has built and delivered such a strong product offering to VC firms that Jungle Ventures will now “need to look for a Big Four player in the US as our partner,” Gowde said.

See also  Eurozone slips into recession after Germany, Ireland reforms

It will be “difficult” to replace some of the features SVB offers in the U.S., Vinny Lauria, managing partner of Golden Gate Ventures, told CNBC.Street Signs Asia“On Tuesday.

“We have been a client of SVB, so we understand the value addition very well,” Lauria said.

Laria qualified that less than 1% of Golden Gate Ventures’ total portfolio was banked with SVB. For companies banking with Golden Gate-backed SVB, they are not fully banking with Bank of America, he said.

Out of Jungle Ventures’ portfolio of more than 70 startups, only two companies have expressed SVB, Gowde said.

“That’s really the reason [these two companies] There were operations in the US,” he added.

While both companies had exposure to SVB, only one company had material exposure, Gowdey said, adding that the company that faced material exposure engaged SVB for payroll services.

As for startups in Southeast Asia, VC firms say Silicon Valley will not suffer contagion from the banking collapse.

“The truth is, here in Southeast Asia, a lot of startups are actually buffered. Most are unbanked in Silicon Valley,” said Lauria of Golden Gate Ventures.

“So the reality is that Southeast Asia is already very insulated from what’s happening in Silicon Valley,” he said.

Leave a Reply

Your email address will not be published. Required fields are marked *