SVB case: The comedy of startup founders who had to rush to the side of the road to withdraw money from the bank

According to Bloomberg news, Asian investors half a world away are also worried about the collapse of Silicon Valley Bank (SVB). Many people even lost money because they could not withdraw capital from this bank.

In Singapore, the collapse of SVB is the subject of many groups of financiers, banks and entrepreneurs at any table. Similar in Mumbai-India, this is also the only story of the startup and investment world when speculating about which bank or company will be the next victim.

In Shanghai-China, SVB’s partners had to quickly issue a statement just a few hours after the incident to reassure investors as well as prevent the psychology of withdrawing money because of similar fears.

In the past few days, the SVB crisis has created a wave of fear across Asia, from the technology sector to investors. The peak was when this 40-year-old bank with $209 billion in assets collapsed in less than 48 hours on March 10, which really shocked many people.

Immediately, Asian investors, from businesses to financial institutions, had to review their portfolios. However, the fact that investors are too stressed and afraid is the biggest risk for banks and investors today when the psychology of withdrawing money in groups, rumors has the potential to be very manipulative.

Fast people slow people

Responding to Bloomberg news, an investment fund that once poured capital for ByteDance said that it had to be glued to the screen to monitor shares of parent company SVB and related news on the night of March 9, 2023. before deciding to withdraw all the money from this bank that very night.

In another situation, an executive of Xiaozhu (a startup similar to Airbnb) told Bloomberg that after receiving a warning from his investor, he had to rush to the curb on the highway to withdraw money by phone. to ensure the safety of capital.

However, not all Asian entrepreneurs are so lucky. One founder in India told Bloomberg that he couldn’t withdraw money from SVB in time and is currently under pressure to turn around capital.

Another case in India was worse when it was difficult to redirect accounts due to using SVB as a place to receive money from customers and to pay staff salaries.

Bloomberg’s individual interviews show that there have been 3 startups and one startup investor who stayed up 2 nights because of SVB.

“I don’t know how many people had to stay up all night because of SVB to find a solution. But the longer you wait, the more the fear spreads and only makes the situation worse. Nobody wants to be the last one to be late,” Alp Ercil, director of Asia Research & Capital Management, an investment fund with $3.5 billion in assets told Bloomberg.

Scared

Even large investment funds in Asia such as Sequoia Capital China, Temasek Holding, ZhenFund and Yunfeng Capital had to rush to check the impact of the SVB case on their business.

Yunfeng’s side had to request internal investigation teams about the influence of SVB on the fund’s investment portfolio and take preventive action. Meanwhile, Sequoia, ShenFund and Temasek all declined to comment on Bloomberg’s question.

“Don’t underestimate the impact of the SVB case on the technology industry,” said China International Capital Corp analyst Liu Zhengning, saying that startups’ deposits are extremely important because they need to use a lot. finance to pay for research activities, staff salaries…

According to Bloomberg, the SVB incident is making investors and startups in Asia, including China, quite uneasy. It is fear and rumours that are perhaps the most destructive of Asian markets today, not the financial fundamentals.

In China, SVB established a branch of SPD Silicon Valley Bank in 2012 and serves a variety of financial products in this market, mainly targeting startups that cannot borrow from traditional banks.

Although SPD has reassured investors, it is still unclear how much the specific damage of this branch is.

Meanwhile, Bloomberg said that although SVB mainly operates in Silicon Valley and the technology industry, the collapse of the bank is eroding strong investor confidence in the banking industry.

“ SVB is a specialized bank so in theory it shouldn’t have much of an impact on Asia. But fear and rumors are contagious, ” said Finian Tan, founder of Vickers Venture Partners in Singapore.

*Source: Bloomberg