SVB has been an important part of numerous Irish scale-up success stories, partnering with local VC in later rounds.
The dramatic collapse of California-based SVB last week following a panicked run on the bank requires a coordinated response from the local tech industry in Ireland, leading industry figures agree.
In a letter to members of the TechIreland community, CEO John O’Dea said that the timing couldn’t have been worse, coinciding as it does with the current cooling of investments, inflation, the energy crisis and post-pandemic stresses.
“SVB’s Irish portfolio of at least 18 high growth start-ups have between them raised over half a billion euros from domestic and international investors, and these scaling companies currently employ more than 1,500”
“SVB has been an important part of numerous Irish scale-up success stories, partnering with local VC in later rounds, leading to such great exits as Movidius (sold to Intel), Glofox (sold to ABC Fitness) and Profitero (acquired by Publicis),” O’Dea said.
“TechIreland data shows that SVB’s Irish portfolio of at least 18 high growth start-ups have between them raised over half a billion euros from domestic and international investors, and these scaling companies currently employ more than 1,500.”
Safeguarding the future of Irish tech
TechIreland said it reached out to experts and key stakeholders for their views on the implications for Ireland’s indigenous community.
“The demise of Silicon Valley Bank is of major concern to the Irish start-up sector”
ISIF, Ireland Strategic Investment Fund, which supports tech companies with growth stage funding, in a statement to RTE gave assurance that their $100m fund with SVB UK is safe.
“The demise of Silicon Valley Bank is of major concern to the Irish start-up sector,” said Brian Caulfield, chair of tech lobby group Scale Ireland.
“While the announcement that HSBC is acquiring SVB UK is a huge relief and will avert problems for quite a few companies, whether HSBC will be as positive towards the sector in terms of new lending remains to be seen.”
The Irish Venture Capital Association noted with concern the collapse, and receivership of SVB. “The move over the weekend by the US Government to fully back depositors is welcome. While there has been an impact in the UK, and to a lesser extent in Ireland, the sale to HSBC is a positive development.
“SVB was a go-to bank for many Irish companies that were looking to expand into the US market. After HSBC’s rescue move in Europe, Irish start-ups continue to look for positive news from the States.
Peter Bennett, Group Technology Head at Davy, stated: “The SVB situation has prompted a new priority for many … diversify and de-risk your banking relationships.”
Ian Browne, managing director of NDRC, the national start-up accelerator, said that Silicon Valley Bank supported innovation for the future in sectors like healthcare, climate tech, which are important areas for building the next big technology companies.
“These are times to be circumspect and learn but there was no way that start-ups could have prepared for a situation like this. The firms that are really affected are earlier stage start-ups that lack huge assets. From a founder’s perspective, it always really pays off to have an in-depth understanding of your company’s finances, working capital, liabilities and be very good at communicating effectively, talk to your investors and stakeholders clearly and often, especially during a crisis.
“I applaud the regulators and governments for acting quickly and while the HSBC takeover is a very positive move, it is not yet business as usual. Ireland should do a retrospective analysis to understand how we are exposed to a global capital market, both from a founder and fund perspective. Take lessons and plan intelligently for the path ahead.”