SINGAPORE — Venture capital firms in Southeast Asia are likely to suffer more from the collapse of Silicon Valley Bank than startups, as finding a replacement for a U.S. bank in the region will be challenging.
“I think from a VC firm perspective, you’re going to see a bigger impact here,” David Gowdy, managing partner at Jungle Ventures, told CNBC’s “Squawk Box Asia“
“It’s really because the local banks here offer different products and services than SVB,” Gowdey said on Tuesday, adding that SVB is Jungle Ventures’ lead bank.
While SVB serves tech startups and VCs mostly based in or with operations in the US, some VCs based in Southeast Asia — such as Jungle Ventures and Golden Gate Ventures — are also SVB’s clients.
The bank provides venture capital firms and startups with access to U.S. capital markets and networking opportunities in the U.S.
SVB serves VC firms and has built a very strong product, Gowdey said, adding that Jungle Ventures may now have to “find the Big Four in the U.S. as our partners.”
Vinnie Lauria, Managing Partner at Golden Gate Ventures, on CNBC’s “street sign asia” Tuesday.
“We’re a customer of SVB, so we understand the added value very well,” says Lauria.
According to Lauria, less than 1% of Golden Gate Ventures’ entire portfolio has ever deposited money with SVB. For those Golden Gate-backed companies that open accounts with SVB, they don’t have full banking services with the U.S. bank, he said.
Of Jungle Ventures’ portfolio of more than 70 startups, only two have had exposure to SVB, Gowdey said.
“That’s really because [these two companies] There is business in the US,” he added.
While the two firms had SVB exposure, only one had significant exposure, Gowdey said, adding that firms with significant exposure had engaged SVB for payroll services.
As for startups in Southeast Asia, venture capital firms say they Unlikely to be affected by Silicon Valley bank failures.
“The reality is that here in Southeast Asia, a lot of startups are really getting buffered. Most don’t have an account with Silicon Valley Bank,” said Lauria of Golden Gate Ventures.
“So the reality is, Southeast Asia has become very isolated from what’s happening in Silicon Valley,” he said.