What SVB’s collapse means to Tech marketers — Ian Kay // Fifth Third Bank
- Part 1What the heck happened to SVB?!? — Ian Kay // Fifth Third Bank
- Part 2 What SVB’s collapse means to Tech marketers — Ian Kay // Fifth Third Bank
Show Notes
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02:31What SVBs collapse means for the martech industrySVB banked 50% of startups in the innovation sector, and this type of lending and funding for startups that are not making a profit is not offered by many banks. Ultimately, SVBs collapse could set back the innovation economy and the startup tech community by several years.
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03:40SVBs unique lending and funding practices for the tech startup communityUnlike traditional banks, SVB focused on early-stage, unprofitable companies with growth potential. Startups would approach SVB for funding after receiving VC funding, to extend the runway, help with dilution, and enable them to scale towards profitability.
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05:12Why startups needed SVBs lending services despite raising large rounds of fundingStartups needed SVB's lending services to preserve capital while investing, extend runway, and avoid dilution of equity ownership. The loans offered by SVB were typically one to two years, and were usually refinanced or paid off in the next round of capital raised by the startups..
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06:37The impact of SVB's collapse on startups and the tech communitySVBs type of lending is done by other banks such as PNC, Bridge, West Bank. Overall, while SVBs type of lending wont go away, its likely that fewer companies will receive this type of funding because these banks are smaller than SVB.
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08:41The lack of opportunities for big banks to support the innovation startup communityThis is due to the fact that it's a niche market that many banks haven't built their business on, and the lending checks are much smaller. Additionally, the tech industry has faced challenges with decreasing valuations, which has further limited the opportunities for lending in this space.
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10:25SVB's unique products and services for startups and VCsSVB was built for the tech community and offered products like annual recurring revenue and venture debt for startups. One of the biggest selling points of SVB was that they would lend to the VC funds and were either limited partners (LPs) themselves or would lend to LPs.
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12:42The trend of prioritizing cashflow positivity soonerStartups are cutting spend and prioritizing getting cash flow positive sooner. Essentially, the days of burning through a lot of money are over, as people want to see profitability sooner.
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14:05SVBs collapse and its Implications for company strategies and capital efficiencySVBs collapse highlights the need for companies to have a clear strategy and be efficient with their capital. Ultimately, companies will need to re-strategize how they use their capital in terms of marketing, and focus on maximizing efficiency as capital won't be as prevalent anymore.
Quotes
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"SVB banked 50% of the startups in the innovation community. That's a huge loss to that community because a lot of banks won't dip into what SVB actually does." -Ian Kay, Executive Director, Fifth Third Bank
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"If I gave you $100 million, and you're burning five or $10 mil a month, you're going to run out of cash quickly. But if I give you another 25 or 30, you have another couple months to operate." -Ian Kay, Executive Director, Fifth Third Bank
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"If Fifth Third went away, tons of banks would come in. But with SVB going away, you're not going to see a lot of banks coming in. That's why they haven't been bought yet." -Ian Kay, Executive Director, Fifth Third Bank
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"SVB was the 16th largest bank in the US, but the largest tech bank. So, youll see some people get market share, but it's going to be a lot less companies getting that type of funding." -Ian Kay, Executive Director, Fifth Third Bank
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"What we've been seeing with a lot of companies is cutting spend and not expecting as high growth on the revenue side, but getting cash flow positive sooner." -Ian Kay, Executive Director, Fifth Third Bank
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"The days of here's a bunch of money, burn as much as you want are over. People want to see you getting to profitability a lot sooner." -Ian Kay, Executive Director, Fifth Third Bank
- Part 1What the heck happened to SVB?!? — Ian Kay // Fifth Third Bank
- Part 2 What SVB’s collapse means to Tech marketers — Ian Kay // Fifth Third Bank
Up Next:
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Part 1What the heck happened to SVB?!? — Ian Kay // Fifth Third Bank
Ian Kay, Executive Director at Fifth Third Bank, talks about the recent turbulence in the banking industry and what it means for the martech industry. Silicon Valley Bank (SVB), a tech-focused bank, was taken down by a classic banking problem, a run on the bank. However, many argue that SVB would have never been in that situation if its management had been more proactive in managing risk and avoiding investments in bonds that were susceptible to interest rate increases. Today, Ian discusses what happened to Silicon Valley Bank (SVB).
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Part 2What SVB’s collapse means to Tech marketers — Ian Kay // Fifth Third Bank
Ian Kay, Executive Director at Fifth Third Bank, talks about the recent turbulence in the banking industry and what it means for the martech industry. SVB was the 16th largest bank in the US, and the largest tech bank. Its collapse will significantly impact the innovation economy and the startup community, but it also highlights the need for companies to have a clear strategy and be efficient with their capital. Today, Ian discusses what SVB’s collapse means to the martech industry.
