The closure of Silicon Valley Bank (SVB) last year may have ended up with a silver lining for Canada’s banks and their startup clients.
Driving the news: TD Innovation Partners launched in June, the latest of Canada’s Big Six banks to bolster their banking and advisory services for tech startups and entrepreneurs, led by former SVB talent.
Catch-up: It’s hard to walk into a local branch and get a business loan if you don’t know when you’ll generate revenue. Instead, tech startups look to specialized banks with teams that understand how startups work and are willing to give them financing, known as venture debt.
- SVB was a leader in venture debt before it failed last year when customers withdrew their deposits all at once.
Why it matters: It might seem like a bad time for banks to beef up divisions focused on venture debt, one of the many things high interest rates have slowed down. But Filip Stoj, head of RBCx’s new practice for pre-seed and seed companies, says the tougher environment has forced startups to be strategic with capital, which the broader advisory and planning services that banks offer can help with.
Bottom line: The common sentiment when SVB shut down was that it would devastate the innovation economy, but that didn’t happen — and Shez Samji, VP of TD Innovation Partners, says it has actually been a positive, since it has created more competition that has given startups more choice and better services.