Southeast Asia VC firms more impacted from SVB fallout than startups

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Contagion from SVB's collapse not likely in Southeast Asia, says venture capital firm

SINGAPORE — Compared to startups, Southeast Asia’s venture capital firms could see a bigger impact from the collapse of Silicon Valley Bank because finding a replacement for the U.S.-based bank in the region will be challenging.

“I think from a VC firm’s perspective, you will see a bigger impact here,” said David Gowdey, managing partner at Jungle Ventures, told CNBC’s “Squawk Box Asia.”

“That’s really because the local banks here aren’t providing the same product and services that SVB provides,” Gowdey said Tuesday, adding that SVB was Jungle Ventures’ primary bank.

While SVB served tech startups and venture capital firms mostly located in the U.S. or have a presence in the U.S. Some VCs based in Southeast Asia — such as Vertex Ventures and Jungle Ventures — were also clients of SVB.

The bank provided VC firms and startups access to the U.S. capital market as well as networking opportunities in the U.S.

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

In terms of replacing some of the features that SVB provides in the U.S., it is “going to be hard,” said Vinnie Lauria, managing partner at Golden Gate Ventures, on CNBC’s “Street Signs Asia” on Tuesday.

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

Lauria qualified that less than 1% of Golden Gate Ventures’ entire portfolio had banked with SVB. For those companies backed by Golden Gate that banked with SVB, they did not engage full banking services with the U.S. bank, he said.

SVB crisis: Southeast Asia now looks like a 'golden child' to U.S. investors, says VC firm

Only two companies in Jungle Ventures’ portfolio of more than 70 startups had exposure to SVB, said Gowdey.

“That was really because [these two companies] had operations in the U.S.,” he added.

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

As for startups in Southeast Asia, VC firms say they will not likely be hit by the contagion from the collapse of Silicon Valley Bank.

“The reality is, here in Southeast Asia, a lot of the startups were really buffered. Most did not bank with Silicon Valley Bank,” said Lauria from Golden Gate Ventures.

“So the reality is, Southeast Asia is already very isolated from what was happening in Silicon Valley,” he said.



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