By Emil Bjerg, journalist and editor of The World Financial Review
SVB’s collapse has had a global impact worldwide, but Southeast Asian economies might emerge stronger from the American bank crisis.
Silicon Valley Bank’s collapse to have limited impact on Southeast Asian start-ups
The collapse of SVB has left many start-ups and tech companies worried, particularly those in the US, where SVB was an obvious choice. However, according to Vinnie Lauria from Golden Gate Ventures, Southeast Asia’s start-up ecosystem hasn’t been impacted severely as only a few regional start-ups had significant exposure to SVB. Lauria said, “The reality is, here in Southeast Asia, a lot of the start-ups were really buffered. Most did not bank with Silicon Valley Bank.”
While there may be concerns about the impact on fundraising for start-ups and VC firms in the region, David Gowdey, managing partner at Southeast Asian VC firm Jungle Ventures, is optimistic. He stated, “I think [the impact on fundraising is] a watch out, but I don’t think that contagion spreads.” Gowdey added that funds in Southeast Asia are well-capitalized, and a lot of capital is available for deployment.
Lighter impact on VCs in the region
A few VCs, like Jungle Ventures and Golden Gate Ventures, did business with SVB and have therefore been impacted by the collapse. According to David Gowdey, the local banks in the Southeast Asian region are not providing the same level of products and services that SVB did, and this is where the impact will be felt the most. Gowdey said that “SVB served and built a very strong product offering for VC firms.”
This could pose a challenge for VC firms in the region, as finding alternative banking partners that can provide the same level of service and expertise as SVB may be challenging. Jungle Ventures will most likely look for new banking partners in the US. Gowdey stated, “Jungle Ventures will now probably have to look for a Big Four player in the US to be our partner,” Gowdey said.
Diversification could benefit Southeast Asian economies
Despite the potential impact on Southeast Asian VC firms, the collapse of SVB could actually benefit the Southeast Asian economy in the long run. The turmoil in the US has led investors to consider diversifying their investments. Lauria from Golden Gate Ventures says: “This has actually been helpful to Southeast Asia. It now looks like a golden child to US investors. Investors are starting to say, “I want to diversify. I want to diversify to different bank accounts, different geographies, different currencies”. And this is where Southeast Asia really has its time to shine in the light of the situation”.
As Europe and the US continue a nerve-wracking path in which, on the one hand, banks are struggling to stay in business and, on the other, the ECB and the FED continue to raise interests, Southeast Asian economies might prove to be great places to diversify.