Members of Canada's technology sector say they're worried the collapse of the Silicon Valley Bank will have a chilling effect on investments in the already-hampered sector.
Members of Canada's technology sector say they're worried the collapse of the Silicon Valley Bank will have a chilling effect on investments in the already-hampered sector.
He estimates 10 per cent or 120 of the 1,200 founders his Waterloo, Ont. innovation hub deals with were impacted by the bank's fall. Up until the Sunday announcement from OSFI, several didn't think they could access the cash they needed to pay workers for the week, he said. "But because the California-based venture firm was concerned about what else was going to happen, they said, `we're not going to do any new investments. We're just going to focus on our existing companies.' They pulled the term sheet, and the company sadly, had to layoff half the team.
Startups raised $14 billion across 701 deals in 2021, when the market was still soaring because businesses projected their huge pandemic growth would continue. Investment activity fell to $9.7 billion across 417 deals by 2022. Albinson agreed. He predicts a venture capitalist in San Francisco with a portfolio of 20 companies -- 18 in the U.S. and two in Canada -- will pay more attention to the U.S. firms in their offices, talking to them about their challenges.That shift would erode years of progress SVB recently discovered in Canada's tech sector, which has long been in the U.S.'s shadow.
SVB expected the net burn rate for Canadian startups to fall even further in 2023 and said investments in these companies tend to go further.
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