Startups with untapped credit at Silicon Valley Bank might need to come to market sooner than expected. Read more.
“Many companies that used to have 24 to 30 months of runway are now at crunch time and they’re gonna have to raise capital,” he said.
The federal banking regulator, the Office of the Superintendent of Financial Institutions, took temporary control of Silicon Valley Bank Canada on the weekend after authorities in the United States and United Kingdom did so in their respective jurisdictions. If the banks demand warrants as part of loan agreements, as has been common in past tough times for tech, or charge higher rates in a now less-competitive market, it would be costly for venture players and “really no different than taking equity,” Felesky said.
If they disappear, and there’s not that competitive pressure, will the other players continue to offer competitive products?“There would be lots of demand for that Canadian book, which would mean either a big U.S. bank or a big Canadian bank will ultimately be your lender,” he said. “It’s a little unnerving, but it’s not a high-risk situation.”
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