The Silicon Valley Bank crisis also affects German start-ups
Berlin The bankruptcy of the Silicon Valley Bank in the USA could finally tip the already subdued mood in the German start-up scene. The stress in the financing system will continue to increase, says Alex von Frankenberg, Managing Director of High-Tech Gründerfonds, to the Handelsblatt: “Even if the Silicon Valley Bank is hopefully not the next Bear Stearns, the financing conditions for start-ups will become more difficult.” US investment bank Bear Stearns was one of the first victims of the great financial crisis 15 years ago.
Already in the final quarter of 2022 – and thus well before the turbulence surrounding the Silicon Valley Bank – the investor barometer had dropped by 25.6 points to minus 42.9 points as a result of the interest rate turnaround and economic weakness.
Apart from the unprecedented corona shock in the first quarter of 2020, the mood among investors investing in young growth companies was last worse around 20 years ago. Julian Riedlbauer, partner at GP Bullhound, sees the Silicon Valley Bank case as a warning sign for German founders. The entire industry needs more financing volume and capital than expected in order to become profitable. The start-ups would have to do everything possible to burn less money and start talks for a new round of financing at an early stage.
The Silicon Valley Bank has not only been active in the USA for years, but also in Great Britain and Germany, among others. In Germany, in 2018 it received a partial bank license from the Bafin for credit transactions in Germany. The Germany subsidiary did not want to provide any information on Friday about the extent to which it is affected by events in the USA.
It is also unclear how many customers the Frankfurt-based company has and how extensive the business is in Germany. On the website, she lists the meal kit providers Hellofresh and Lilium as customers, among others. Both companies could not immediately be reached for comment.
A fintech founder, who does not want to give his name, only had business contact with the British subsidiary of the SVB on Friday. “Everything was fine and ran smoothly.” The situation now looks different. Funds called for funds to be withdrawn: “Every bank falters.” This is irresponsible behavior on the part of investors.
Read more about this here: High-Tech Gründerfonds can invest even more in the future
Stephan Heller, founder of the AlphaQ Venture Capital fund of funds, advises staying calm. His team learned a lot from the collapse of the German payment service provider Wirecard and is therefore prepared to react quickly and effectively to such crises. Von Frankenberg adds: “There will continue to be money, at least for the good and very good companies.”
More: Silicon Valley Bank: How dangerous is the institute’s crisis for the financial system?