African and Nigerian tech start-ups could be affected by the wildfire of banking collapse in the United States of America. At least two big banks – Silicon Valley Bank (SVB) and New York-based Signature Bank experienced a run last week, forcing regulators to take over.
The latest was Signature Bank which regulators had to take over on Sunday, March 12, 2023, barely one week after the fall of SVB.
Join our WhatsApp ChannelAlthough Nigerian tech companies may not be directly exposed to both Silicon Valley Bank and Signature Bank, the events may actually undermine the ability of African tech startups to access capital in the near term.
Lagos-based Economic Analyst, Abiola Razaq, believes that the events may temporarily shut the tap for capital access, at least from U.S venture capital firms and other relevant institutional investors who may directly or indirectly be affected by the collapse of SVB and Signature banks. Naturally, it is expected that these investors will now fix their gaze more on “scrutiny of cash flows of their investee companies to mitigate probable risks of exposure.”
READ: Signature Bank Falls: U.S Records Third Largest Bank Failure In History
“This signals concerns about the ability of Nigerian tech companies to access venture capital funds from the U.S going forward and indeed reinforces concern about how fast a system liquidity can mutate into a run on a bank and ultimately its solvency,” Abila Razaq, a Lagos-based economic analyst, told our correspondent on Monday.
More than 10 global tech companies have, so far, disclosed exposure to the seeming wild fire.
List of tech companies that have disclosed exposure to failed Silicon Valley Bank:
At, 10 companies have disclosed exposure to SVB alone. They are:
- Circle: $3.3 billion
- Roku: 4487 million
- BlockFi: $227 mil
- Roblox: $150 million
- Ginkgo Bio: $74 million
- IRythm: $55 million
- RocketLab: $38 million
- Sangamo Therapeutics: $34 million
- Lending Club: $21 million
- Payoner: $20 million
Prime Business Africa (PBA) had reported on Monday morning that the fall of Signature Bank did not come as a surprise, following the experience at Silicon Valley Bank days before Signature faced a run.
The PBA report stated that Signature had had some red flags, especially with some underlying salient issues relating to its deposit funding from cryptocurrency market.
“It’s a big confidence issue for the U.S market at this time of rising interest rate, when it’s expensive to bridge liquid gaps,” Lagos-based economic analyst, Abiola Rasaq had said in an exchange with this newspaper.
