Southeast Asia VC companies could witness a more powerful effect from SVB fallout than startups

March 20, 2023: Compared to startups, Southeast Asia’s venture capital company could see a more effective impact from the collapse of Silicon Valley Bank as finding a substitute for the U.S.-based bank in the area will be challenging.

“I think from a VC enterprise’s perspective, seeing a bigger impact here,” said David Gowdey, managing partner at Jungle Ventures, told.

“That’s actually due to the local banks here aren’t providing the same product and benefits that SVB is delivering,” Gowdey said on Tuesday, adding that SVB was Jungle Ventures’ primary bank.

While SVB served tech new businesses and venture capital firms primarily located in the U.S. or have a sight in the U.S., Some VCs based in Southeast Asia, such as Jungle Ventures and Golden Gate Ventures, were also clients of SVB.

The bank provided VC companies and startups access to the U.S. capital market and networking options in the U.S.

SVB served and built a solid product offering for VC firms, said Gowdey, which added that Jungle Ventures will probably have to “look for a Big Four player in the U.S. to be our partner.”

Regarding replacing some of the quality that SVB provides in the U.S., it is “going to be hard,” stated Vinnie Lauria, which partner at Golden Gate Ventures, on Tuesday.

“We were a client of SVB, so we know the value-add very well,” said Lauria.

Lauria qualified that is lesser 1% of Golden Gate Ventures’ entire portfolio banking with SVB. For those firms backed by Golden Gate that banked with SVB, they engage in complete banking services with the U.S. bank, he stated.

Only two firms in Jungle Ventures’ portfolio of over 70 startups had exposure to SVB, said Gowdey.

“That was really because we had operations in the U.S.,” he added.

While the two companies had to show to SVB, one had material exposure, said Gowdey, the firm that faced material exposure had engaged SVB for payroll services.

As for startups in Southeast Asia, VC company say the contagion will not likely reach them from the decrease of Silicon Valley Bank.

“The reality is, here in Southeast Asia, many startups were buffered. Most are not banking with Silicon Valley Bank,” stated Lauria from Golden Gate Ventures.

“So, the reality is, Southeast Asia is very isolated from what happens in Silicon Valley,” he stated.