For a year now, Spanish start-ups have been aware that accessing financing for their projects is more complicated. If in 2021 the record was broken in the volume of investment in this type of company in Spain up to 4.3 billion euros, in 2022 the funds made it much more difficult. Funding for these entrepreneurs was reduced by 20%, up to 3.5 billion, according to the report “Investment Trends in Spain”, drawn up by Bankinter’s Start-ups Ecosystem Observatory in Spain. The rise in rates and the end of confinement were behind this fall in investments. This year it seemed that it would be the exercise of the big financing rounds, between one and ten million. But the bankruptcy of Silicon Valley Bank, an American entity specialized in financing this sector, has once again spread pessimism in this segment of the economy.
The earthquake unleashed in California has been noticed a lot in Spain. At least that’s how Gonzalo García, Business Analyst at the start-up accelerator Lanzadera explains it. “Our companies have no exposure to the losses that could be generated after the bankruptcy of the SVB, but there is a lot of fear that it will end up splashing us. We have just experienced two financial crises and the intervention of the Fed in the banking crisis indicates that the problem could be more serious than it is said. In addition, the words of the President of the United States, Joe Biden, have not reassured the sector”, points out García. The Spanish association that groups venture capital funds (SpainCap) has refused to comment on the situation.
It’s too early to do a damage count. “The impact on the ecosystem of start-ups will not be seen in the short term, but in the medium or long term it is not known what may happen”, they explain from Ship2B Ventures. “Without a key player like SVB, in the short term the impetus necessary for the financing ecosystem of innovative companies to survive will be reduced, so a certain selection may occur regarding the start-up in which it is decided to invest, and some may not be able to obtain the necessary resources in the short term”, says Virginia Pérez, director of investments at Tressis. Iván García Berjerano, CEO of the start-up Finanziaconnect, expresses himself in a similar way. “It is likely that events like SVB’s will paralyze certain investments, which will slow down or hinder possible exits and divestments in some start-ups in the most advanced phases”, he points out.
The venture capital firm Ship2B Ventures assures that the earthquake, although it will not directly affect Spain, will have indirect repercussions for the sector. “It affects credibility and can have negative effects on future funding rounds”, they explain. According to Ignacio Moreno, co-founder of fintech Capchase, with significant investments in the US, the fall of SVB is a very strong blow to the American entrepreneurial ecosystem. “It’s a very big stick, although banking has been more affected. The problem has been more about the management of bank assets than the start-ups themselves”, he says.
“These kinds of companies have been victims of what has happened. They don’t usually have large financial departments and have chosen to concentrate their income in banks like SVB”, explains Íñigo Laucirica, Investment Manager of the Samaipata fund. The SVB is an entity founded in 1983 and many of its clients are start-ups. These companies had been financed through the bank and had also deposited their savings there. Among some of the companies with the most deposits in the entity, there are groups such as the BuzzFeed media, with deposits worth 56 million dollars; cryptocurrency exchange platform Circle, which had deposited up to $3.3 billion; or biotech company Alphatech, with up to $14 million in deposits.
Some of the Spanish unicorns, that is, start-ups that reach a value of 1 billion dollars in valuation, such as Cabify, Fever or Wallabox, have grown in the United States, although their exposure to the bankruptcy of SVB is limited. “We have no connection with any of the affected banks”, they point out from Wallabox. Other start-ups, such as Getir, did not want to comment on their situation.
Euphoria in venture capital
Contrary to the fears of entrepreneurs, the banking crisis experienced in the United States represents an opportunity for venture capital. “When this kind of thing happens, financing alternatives gain visibility”, says Ignacio Moreno, from fintech Capchase, which specializes in financing innovative projects. “We will continue to finance startups”, he says.
Spanish venture capital funds have been less exposed than American ones to the crisis caused by the SVB. “Bank financing is very residual in this segment of the market. For our part, what has happened at SVB does not alter anything. We will continue to finance projects”, remarks Íñigo Laucirica, from the Samaipata fund.