Startups
From Crisis to Opportunity: Tech Industry Bands Together to Save Startups Impacted by SVB Failure
Prominent venture capitalists, technology executives, and founders of startups have been racing to save companies that have been caught up in the collapse of Silicon Valley Bank. The sudden failure of the bank on Friday, which focuses on tech startups, has left California’s tech entrepreneurs worried about how to make payroll, leading industry executives to do what they can to save small businesses from going under.
As more than 3,500 CEOs and founders representing some 220,000 workers signed a petition started by Y Combinator appealing to the U.S. Treasury Secretary Janet Yellen and others to backstop depositors and investigate any “malfeasance or mismanagement” by SVB executives, venture investors have been advising startups to seek alternatives to gain short-term liquidity. Meanwhile, OpenAI CEO Sam Altman bailed out some entrepreneurs from his pocket. Small startups have been stepping up to help others, highlighting the tech community’s willingness to support each other in times of crisis.
Over the weekend, Henrique Dubugras, co-CEO of fintech startup Brex, worked hard to provide a lifeline for startups affected by the collapse of Silicon Valley Bank.
On Friday, Brex announced an emergency credit line to help startups make payroll, which Dubugras said had attracted $1.5 billion in demand from nearly 1,000 firms by Saturday evening. Meanwhile, Aleem Mawani, founder of small company Streak, offered his funds to help other startups struggling to pay staff, saying he aimed to prioritize lending to those living paycheck to paycheck.
Petition Signed by Over 3,500 CEOs and Founders
By late Saturday, more than 3,500 CEOs and founders representing around 220,000 workers had signed a petition started by Y Combinator, which appealed directly to US Treasury Secretary Janet Yellen to backstop depositors, including many small businesses who face a risk of failing to pay their staff in the next 30 days. The petition calls for more robust regulatory oversight and capital requirements for regional banks and an investigation into any malfeasance or mismanagement by Silicon Valley Bank executives, warning that over 100,000 jobs could be at risk.
Investors Advise Startups to Seek Alternative Liquidity Sources
Venture investors have been advising startups to find alternative liquidity sources. Lowercarbon Capital, for example, has offered loans to portfolio companies that have funds stuck at Silicon Valley Bank. The firm will provide payroll support for the next two weeks and plans to wire out funds on Monday. Meanwhile, Khosla Ventures is talking to more than 100 portfolio companies, assessing their critical needs and plans to bridge where it is a lead or major investor.
Altman Offers a Lifeline to Struggling Entrepreneurs
Altman has provided a lifeline to struggling entrepreneurs like Rad AI’s Gurson. When the startup’s attempts to transfer funds out of Silicon Valley Bank failed, Gurson emailed Altman, who responded within an hour or two, offering him six figures, enough to make payroll with no strings attached. Altman said he did not view his contributions as risky, even if Silicon Valley Bank fails to find a buyer or loan, adding that “people are facing a real liquidity crunch through no fault of their own, and employees need to get paid.”
The collapse of SVB has caused many in the tech industry to call for greater regulatory oversight and capital requirements for regional banks. The petition, signed by over 3,500 CEOs and founders, seeks to ensure that depositors, many small businesses at risk of failing to pay their staff in the next 30 days, are backstopped.
With over 100,000 jobs at risk, it is essential that the tech industry comes together to find a solution. Venture investors have advised startups to seek alternatives to gain short-term liquidity, and some have already started offering loans to portfolio companies with funds stuck at SVB.
Despite the difficult circumstances, many in the industry have shown their willingness to support others. Altman’s generosity in bailing out entrepreneurs from his own pocket and Dubugras’ efforts to secure emergency credit lines for startups are just a few examples.
In times of crisis, the tech industry has historically come together to support one another. The collapse of SVB has reminded us of the importance of community and collaboration in times of need. As the industry moves forward, it is essential to remember the lessons learned and ensure that the necessary regulatory oversight is in place to prevent such events from happening again.
Al Nashmiah Farms, committed to aiding women burdened by debt and facing the threat of incarceration, offers a novel solution for them to earn their way to freedom. Under the leadership of Razan Harb, motivated by her family’s financial struggles, the farm has become a pivotal force in rescuing those ensnared in the debt trap, providing them with employment and a sense of purpose.
Harb, observing the plight of many women who took loans in hopes of improving their families’ fortunes, only to be overwhelmed by unfortunate circumstances, economic downturns, and oppressive taxes, has established a farm that serves as both a source of employment and a supplier of high-quality produce to major markets.
The farm’s operations include the provision of household essentials, emphasizing the importance of quality through methods such as nitrogen sterilization and the use of healthy packaging. Additionally, Harb has initiated work-from-home opportunities, enabling women to engage in the packing of vegetables and fruits for market and direct sales, thereby offering a sustainable model for economic independence and recovery from debt.
Selina Bieber, the Senior Director of Global Markets at GoDaddy, has predicted a significant increase in Egypt’s e-commerce revenue. By 2028, it could reach $9.88 billion.
Godaddy is forming strategic partnerships and launching initiatives to help local entrepreneurs. These efforts align with Egypt’s digital transformation goals and its Vision 2030.
In an interview with the Arabic financial news “Amwal Al Ghad,” Bieber spoke about GoDaddy’s plans and how they match Egypt’s 2023 strategy. She highlighted the company’s aim to provide effective, easy-to-use digital tools and services. By 2024, GoDaddy wants to serve more customers in Egypt by making its digital tools more widespread.
The company is working closely with the Egyptian government, especially the Ministry of Planning. They are offering training programs to improve the digital skills of startups and existing businesses. GoDaddy’s services in Egypt include domain registration, web hosting, e-commerce solutions, and digital marketing tools.
Recent surveys support Bieber’s positive outlook for e-commerce in Egypt. They show a clear trend towards digital strategies among small businesses. Many are realizing the importance of having an online presence for their growth and success.
As GoDaddy continues its partnerships and supports government digital initiatives, its influence on Egypt’s digital landscape is growing. The company is committed to sustainability and reducing its carbon footprint. It aims not just for business growth but also to contribute to a sustainable and thriving digital economy in Egypt.
The 2028 projection indicates a vast potential for e-commerce, with GoDaddy playing a key role in this digital evolution.
Lendo, a Saudi Arabia-based shariah-compliant debt crowdfunding marketplace, has raised SAR 105 million ($28 million) in Series B funding led by Sanabil Investments, a wholly-owned company by the Public Investment Fund (“PIF”). The round saw participation from Shorooq Partners, AB Ventures and other investors.
Lendo is a Shariah-compliant, debt crowdfunding marketplace that helps pre-finance outstanding invoices for businesses in Saudi Arabia. The platform is a community of creditworthy borrowers and sophisticated investors looking for alternative investments. The platform is licensed by the Saudi Central Bank (SAMA). Lendo will use the funds to support its fast-growing customer base in Saudi Arabia which has grown 3X year-on-year, introduce more innovative financing products, and accelerate market expansion plans.
“With this funding round, we are going to expand into new markets, support new and current customers, and launch new Shariah-compliant products, all the while continuing to innovate the marketplace for digital lending. We are going to make financial services more accessible, affordable, and inclusive for everyone. I am excited to see what the future holds for our company,” said Osama Alraee, CEO, and co-founder of Lendo, who also disclosed its plans for an IPO within the next few years.
Alraee has also expressed his gratitude to SAMA (Saudi Central Bank), Fintech Saudi, MCIT, Misk, and Monshaat for their unwavering support, emphasizing the pivotal role they have played in advancing financial inclusivity and fostering innovation in partnership with Lendo to reshape the financial landscape. Their dedicated efforts in advancing financial inclusivity and fostering innovation have been invaluable to us. We greatly appreciate their partnership in our mission to transform the financial landscape
Commenting on the announcement, Sanabil Investments said: “Lendo is a leading fintech company that is transforming the financial services industry in their specialist area of Shariah-compliant digital lending for SMEs. The Lendo team, especially the founders, Osama and Mohamed, have achieved a significant amount in a relatively short period, and we are eager to join their journey of increasing access to flexible financial solutions in Saudi Arabia and the region at large.”
“The growing demand for alternative, agile, and accessible lending solutions presents a significant opportunity. At Lendo, we are well-positioned to lead the charge in promoting financial inclusion not only in Saudi Arabia but also beyond. By fueling SME growth, we aim to contribute to the realization of Saudi Arabia’s Vision 2030 economic goals and to create a ripple effect of opportunity throughout the MENA region,” said Mohamed Jawabri, COO, and co-Founder of Lendo.
Lendo previously raised a SAR 27 million Series A funding round ($7.2 million) in 2021 led by Derayah Ventures with participation from Seedra Ventures and other investors, bringing the fintech’s total funding to SAR 132 million ($35.2 million).
Since the inception of Dec 2019, Saudi fintech Lendo has processed more than 2,500 financing transactions on its platform, providing over SAR 1 billion ($300 million) in financing to SMEs and generating SAR 140 million ($37 million) returns for investors.
The Small and Medium Enterprise financing landscape in the Middle East and North Africa (MENA) presents a substantial market opportunity as limited financial access continues to restrict the growth of the region’s businesses, with commercial banks hesitant to issue loans to SMEs at scale, resulting in a high percentage of declined financing requests annually. According to the International Finance Corporation (IFC), the SME financing gap is estimated at SAR 19.5 trillion ($5.2 trillion) every year in developing countries.
Lendo’s debt crowdfunding platform aims to bridge the financing gap for SMEs, which aligns with the Saudi Vision 2030 to significantly expand SME lending from 4% in 2018 to 20% by 2030.
The total value of debt crowdfunding in Saudi Arabia surged from 1.4 million SAR in 2019 to SAR 771 million in 2022, marking a remarkable 430% growth, according to SAMA’s annual fintech report 2022.
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