Silicon Valley Bank: how bad could it get and what does it mean for fintechs?
This week is going to be quite volatile for regional banks. Because of the government intervention, most fintech and tech companies are okay. The big learning lesson is that diversification is critical. SVB around for 40 years and many companies have been relying on that. For companies like Yieldstreet that didn’t use SVB meaningfully, it’s a wake-up call for VCs to diversify and have their assets at multiple banks, not just one or two.
What does this mean for fintech funding?
Fintech funds should not be impacted. Many funds sitting on a ton of dry powder. Most of the funds don’t run on capital. That’s why capital call features exist. Silicon valley mostly had exposure to big tech VCs (not even growth equity VCs) and PE investors. Funding and fintech should not be impacted as much. For seed stage and Series A companies, it may be harder to access your capital from SVB immediately. There might be a delay, but it shouldn’t impact it.
How much of a shock will there be for the financial and tech industries?
The government took good measures to stop the contagion. As of today (Monday), there’s still pressure on some banks. A few are really getting impacted. However, it should be controlled and I dont think there should be a wider impact on fintech or the tech industry at this time.
It depends on how the consumer behaves this week. In our business, we haven’t seen a massive request come in from consumers, even from people who have over 250K in their wallets. Yieldstreet’s products have no exposure to SVB which is good news.
At this time, we are not seeing a dramatic change in consumer behavior.