News
Silicon Valley Bank’s sudden closure sends shockwaves through financial markets
On Friday, Silicon Valley Bank had its operations shut down by California banking regulators. The Federal Deposit Insurance Corporation (FDIC) was then appointed as the receiver to handle the bank’s assets at a later time.
The news shocked the financial world with its sudden collapse, becoming the largest bank to fail since the 2008 financial crisis. The bankruptcy has sent shockwaves through global markets and left countless companies and investors in limbo with billions of dollars at stake.
Santa Clara-based lender Silicon Valley Bank, the 16th largest bank in the US with $209 billion in assets, collapsed abruptly due to the impact of the Federal Reserve’s interest rate hikes on the start-up space, in which it was a major player.
Silicon Valley Bank’s attempt to offset the loss of deposits by raising capital resulted in a $1.8 billion loss on Treasury bonds, which were impacted by the Federal Reserve’s interest rate hikes.
The failure underscores the fragility of the banking system and has prompted calls for increased regulation to prevent future catastrophes.
Highlights
- California regulator closed SVB and also took control of SVB’s customer deposits.
- SVB focused on lending to start-ups; branches are to reopen Monday.
- FDIC to sell bank assets; ‘chaos’ reported amid withdrawals.
- Bank shares fall in U.S. and Europe.
- Crisis exposes banking ‘vulnerabilities’ amid rising rates.
- Bloomberg: Almost 50% of US venture capital-backed startups had ties to Silicon Valley Bank.
- Fortune: Days before Silicon Valley Bank’s historic collapse, its CEO sold $3.6 million worth of stock in what is being considered a potentially problematic transaction.
Silicon Valley Bank’s popularity among startups
Silicon Valley Bank’s popularity among startups and venture capitalists extends beyond US borders, with companies and investors worldwide choosing the bank as their top choice for financial services.
Startup founders from around the globe are working against time to move their money out of Silicon Valley Bank (SVB), which was shut down by US regulators last night, in what is being called the largest bank failure since the 2008 Lehman bankruptcy, which sparked off a global financial crisis.
Roblox Corp and Roku Inc, both of whom had significant deposits at Silicon Valley Bank, have announced that they had hundreds of millions of dollars invested in the institution.
Alternative digital banks for Startups
As startups and investors seek alternative banking options in the wake of Silicon Valley Bank’s sudden collapse, Brex has emerged as a potential solution, among others. The financial services provider, valued at $12.3 billion, is expediting the process for founders looking to set up bank accounts for their businesses and is reassuring customers that it has not been impacted by the “current banking volatility.”
In fact, Brex has reportedly received billions in deposits from former Silicon Valley Bank customers overnight.
The company has also offered VIP support to those seeking to switch banks, making it an attractive option for startups looking for a quick and secure banking solution amidst the uncertainty of recent events.
For its part, fintech company Mercury, which has been specializing in banking services for startups since 2019, has reported a surge in inbound interest from potential clients.
There are several alternative digital banks for startups to consider beyond Silicon Valley Bank, including:
- Brex: A financial services provider that offers credit cards and cash management solutions to startups.
- Mercury: A banking platform that provides financial services for startups, including bank accounts, payment processing, and cash management.
- Chime: A mobile banking platform that offers no-fee banking services and cash management tools.
- Novo: A digital bank that provides business banking services and integrations with popular accounting and financial software.
- BlueVine: A fintech company that provides banking services to small businesses, including checking accounts, loans, and lines of credit.
Silicon Valley Bank will reopen its branches on Monday following its sudden collapse. The bank’s closure had left many clients unsure of the fate of their investments, but this news brings some relief. Many are now watching closely to see how the bank will recover from this event.
Lendo, a Saudi Arabia-based Shariah-compliant crowdlending marketplace, has signed a Memorandum of Understanding (MOU) today with J.P. Morgan to improve access to financing for small and medium-sized enterprises (SMEs) across the country.
The MOU was signed during 24 Fintech, a premier fintech event that brings together industry leaders, innovators, and investors in Riyadh.
J.P. Morgan and Lendo are working together on potential opportunities to support the SME sector in Saudi Arabia in growing and sustaining the remarkable demand in this market.
“This strategic collaboration with J.P. Morgan, a pioneer in the financial industry, marks a significant milestone for Lendo,” said Osama Alraee, CEO and co-founder of Lendo. “By combining our strengths, we’ll deliver cutting-edge financial solutions to SMEs, supporting their growth and contributing directly to the realization of Saudi Arabia’s Vision 2030.”
The SME financing landscape in 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.
The total SME financing gap in developing countries is estimated to be approximately $5.2 trillion, according to the International Finance Corporation (IFC).
Lendo’s debt crowdfunding platform aims to bridge the financing gap for SMEs, aligning with Saudi Vision 2030’s goal to significantly expand SME lending from 4% in 2018 to 20% by 2030.
According to the latest available report from the Saudi Central Bank (SAMA), the total value of debt crowdfunding in Saudi Arabia surged from SAR 1.4 million in 2019 to SAR 771 million in 2022, marking a remarkable growth.
Lendo raised SAR 132 million ($35.2 million) in total funding from leading investors, including the most recent Series B led by Sanabil Investments, a wholly-owned company by the Public Investment Fund (PIF).
Since its inception in December 2019, Saudi fintech Lendo has processed over 5,000 financing transactions on its platform, providing over SAR 2 billion ($600 million) in financing to SMEs and generating SAR 280 million ($74 million) in returns for investors.
TA Telecom, a prominent player in the Middle East’s tech sector, has unveiled AnteThink, an AI-driven tool designed to enhance decision-making processes for individuals and businesses alike.
With a history of influencing the tech landscape through various initiatives, including advanced mobile solutions, high-volume payment platforms, and ventures in e-commerce, fintech, and analytics, TA Telecom has carved a niche for itself. Serving a vast user base of 40 million and processing an impressive 15 billion transactions across its platforms, TA Telecom has cemented its position as a tech industry leader, with some of its ventures achieving the status of Y Combinator companies.
Established in 2000, TA Telecom has emerged as a prominent player in the technology sector. With over 40 million users and processing 15 billion transactions annually, TA Telecom has made a notable impact. Recognized for its contributions by the Financial Times and featured on Deloitte’s list of fastest-growing tech companies in EMEA, TA Telecom is known for its adaptability and forward-thinking approach in the ever-evolving global tech landscape.
Sameh Ibrahim, CEO of TA Telecom, highlights the potential of AnteThink: “AnteThink reflects our commitment to leverage technology for practical impact. It aims to provide clarity and confidence in decision-making, whether in the professional or personal sphere. AnteThink is a tool that can empower startup founders, executives, and individuals to make more informed choices, alleviating the stress and uncertainty often associated with critical decision-making.”
Mostafa Ashour, CEO of Y Combinator-backed startup NowPay, shared his perspective on AnteThink: “AnteThink transformed our strategic planning, allowing us to explore various scenarios and prepare for different outcomes. It has strengthened our decision-making process, helping us navigate the complexities of the business landscape.”
AnteThink embodies TA Telecom’s commitment to innovation, focusing on supporting the startup ecosystem. The tool is tailored to help leaders and executives navigate the complexities of business management and strategic development by providing a clear picture of potential outcomes.
Key Features of AnteThink include:
1. Second Order Mode: Offering a comprehensive analysis of broader impacts, fostering a strategic mindset for long-term success.
2. Optionality Mode: Enabling detailed evaluation and comparison of different choices to ensure decisions align with strategic objectives and values.
3. Inversion Mode: Focusing on identifying and mitigating potential risks, thereby strengthening risk management strategies.
Credit: Antethink
AnteThink’s advanced AI technology aims to assist decision-makers with insightful analytics, offering guidance through the decision-making process.
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.
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