The Silicon Valley Bank crash provides valuable lessons around the world

by Ana Lopez

Welcome to The exchange! If you received this in your inbox, thank you for signing up and your trust. If you read this as a post on our site, please subscribe here so that you can receive it immediately in the future. Mary Ann is on a well-deserved break this week, so I’m filling in for her and bringing you the most exciting fintech news from last week. Let’s dive into the fintech news now, because you’re probably wondering what’s going on with your bank of choice, and I promise I’ll get into that first. Let’s go! — Christine

We’ve learned a lot more about the Silicon Valley Bank collapse since the last time you read this newsletter (a lot).

The latest is that SVB Financial has filed for Chapter 11. And First Republic Bank, caught up in all this mess earlier this week, found some saviors in the way of some of the country’s largest banks reportedly coming together to bolster the bank with about $30 billion in bailout deposits.

This week some of my colleagues have been digging into the effects on consumers, companies, banks, investors, etc. – all over the world – who had deposited money with the SVB. If anything, it shows how connected the startup ecosystem really is.

Annie Njanja and Tage Kene-Okafor got the scoop on African companies affected by the bankruptcy of the SVB. For example, they spoke to Nala, a mobile money transfer startup, which was able to get its money out of SVB before it collapsed. Chipper Cash, on the other hand, was one of many startups that didn’t have access to some of their money at the time.

They noted how prolific SVB was in the startup ecosystem when it came to companies opening SVB bank accounts, especially those that were part of a US accelerator program, and even explained how difficult that process was if potential account holders didn’t have a Social Security number. or established US address. They also wrote that incidents like this, along with existing high-risk banking options, have “reinforced the need to build homegrown solutions” in Africa.

“If you want US-based banking that (still) inspires credibility with investors, those are your options,” said Stephen Deng, co-founder and general partner at Africa-focused VC startup DFS Lab. “I think the changes are founders need to know how to manage counterparty risk. Sweep networks and treasury management are all top of mind.”

Meanwhile, Brian Heater reached out to founders and investors in the robotics sector, typically a capital-intensive industry, about what the implications could mean for them in terms of accessing future capital and continuing to diversify funding sources.

An interesting comment came from Playground Global’s Peter Barrett, who said: “As SVB rises from the ashes – and we act to reduce the weaponization of concentrated digital media – money may not become impossibly expensive for capital-intensive technologies like robotics. On the other hand side now that we have motor memory for bank runs things can get messy How best can an adversary attack innovation in robotics We saw how destructive a handful of influential tweets and emails could be to a valued and respected 40 year old institution Why bother with a cyber-attack when a few well-placed words in all caps from seemingly trustworthy sources could injure thousands of our most innovative companies?”

Indeed. As you can imagine, all of this continues to evolve, so stay tuned for more.

Moving on, we are constantly being told to diversify our positions in finance – have money in a number of different mutual funds or some money in the form of checks and other money in savings. In, all this SVB stuff got Natasha Mascarenhas thinking about how to do this.

She talked to some of the founders and investors about the concept of single points of failure. Specifically, where else can a company diversify – building a team and succession plans, for example – to ensure that the eggs are not all in one basket.

Before I get into more news, I want to mention that while people are taking money out of the SVB, there are still people who support the bank. For example, Brex announced that it was depositing $200 million of his money into SVB – to take it from other big banks to do this. CNN also reported on others.

Weekly news

Some companies that provide banking services to startups have stepped up after the collapse of Silicon Valley Bank to offer their services and help companies maintain cash flow. Mary Ann reported on a few companies such as Rhowhich saw a wave of new customers including Mercury, which moved quickly over the weekend to launch a new product called Mercury Vault. This product “provides customers with comprehensive FDIC insurance of up to $3 million through a new product in the wake of the Silicon Valley Bank collapse. That’s 12x the industry standard for $250,000 in FDIC insurance institutions that other institutions offer. Then Friday the company increased that, announced on Twitter that “by Monday, Mercury customers will have access to up to $5 million in FDIC insurance — 20x the limit per bank.”

stripe was pretty active this week. I’ve updated a previous story Mary Ann was working on about Stripe seeking additional funding. At the time, it was expected to bring in around $2 billion, but instead Stripe ended up with $6.5 billion, but at a lower valuation of $50 billion. Series I proceeds will go toward “providing liquidity to current and former employees and addressing employees’ withholding tax liabilities related to stock awards, resulting in the retirement of Stripe stock that will support the issuance of new stock to Series I investors.” will compensate.” Stripe was also chosen working with OpenAI to make money with ChatGPT and DALL-E.

Reports Manish Singh: “PhonePe raised another $200 million as part of an ongoing round, a move that has now helped it raise $650 million in recent weeks despite the market slump as the Indian fintech giant replenishes its war chest after the recent separation from parent company Flipkart. walmart, which owns the majority of PhonePe, has invested $200 million in the startup. The ongoing round values ​​the Bengaluru-headquartered company at $12 billion pre-money. The startup has said it plans to raise up to $1 billion as part of the ongoing round.

Natasha Mascarenhas reports: “Founders are still shaking off the dust a week after the collapse of Silicon Valley Bank. Rumors are swirling about who would want to buy the assets of the beleaguered bank. Some of the top firms urged their portfolio managers to diversify their assets as the bank was collapsing, and continue to do so even as regulators have stepped in to ensure all depositors have access to their stored cash. While diversifying assets may seem obvious in hindsight, following that advice is harder than it looks.”

According to Sift‘s Q1 2023 Digital Trust and Safety IndexBuy now, pay later (BNPL) companies saw payment fraud increase by a whopping 211% in 2022 over 2021. The report looked at more than 34,000 sites and apps and highlighted some specific scams that fraudsters are using to steal from BPNL- companies and sellers. Telegram, for example, is a platform on which Sift said “a rapid proliferation of scammers advertise the services they can provide with stolen information,” including fake credit cards and the sale of compromised email credentials. In one scheme, Sift spotted a fraudster posting “unlimited access” to an account with three of the top BNPL providers for just $35.

Adyenwhich offers end-to-end payment options, it said further developed its digital authentication solution, combining security and seamless checkout experiences for it customers. During testing, Adyen was able to authenticate consumers on behalf of the publisher while remaining on the merchant’s checkout page, helping merchants achieve a conversion increase of up to 7%.

Financing and Mergers and Acquisitions

Seen on

Wingspan raises $14 million for its all-in-one payroll platform for contractors

Here’s a New Corporate Card Startup Backed by $157M in Equity, Debt, Chasing Brex, Disaster on

Metaverse payment platform Tilia gets strategic investment from JP Morgan

Indonesian Broom develops automated asset-backed loans for used car dealers

Credit-led Nigerian fintech FairMoney is acquiring PayForce in retail-merchant banking

And elsewhere

Masttro Secures $43 Million Growth Equity Investment Led by FTV Capital

Cover Genius, an embedded protection insurtech, acquires Clyde

Greek fintech Natech grabs €10 million in convertible bond to expand

Payment infrastructure startup Payabli closes $12 million

Apexx Global, a payment orchestration startup, has raised $25 million

Chile-based recurring payments company Toku raises $7.15 million

That’s it for now. I hope you enjoyed my take on Mary Ann’s column. Don’t worry, she’ll be back for the March 26 edition! Have a nice week, Kristen

Learn more about SVB's 2023 collapse on TechCrunch

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