A group representing Canada’s venture capital sector is asking Prime Minister Justin Trudeau’s government to provide emergency financing to help startups affected by the collapse of Silicon Valley Bank.
(Bloomberg) — A group representing Canada’s venture capital sector is asking Prime Minister Justin Trudeau’s government to provide emergency financing to help startups affected by the collapse of Silicon Valley Bank.
The Canadian Venture Capital and Private Equity Association is lobbying Trudeau to dust off an emergency program used in the Covid-19 pandemic, in which smaller companies that need cash could issue convertible debt to a government agency known as BDC, according to a letter seen by Bloomberg.
Startups that were already struggling before SVB failed “may be challenged to find capital” to replace credit lines and loans the California-based bank had provided, Kim Furlong, the association’s chief executive officer, says in a letter to Trade Minister Mary Ng. “This may lead to job losses.”
“Over the longer term, there will be ripple effects now that the largest and most aggressive bank lender to the American VC ecosystem is gone,” Furlong wrote.
A spokesperson for Ng referred questions to Finance Minister Chrystia Freeland, whose office didn’t immediately respond to a request for comment.
The venture capital group is also asking the government to relax the terms of a separate public-private financing partnership, in a way that accelerates the flow of venture capital to companies.
SVB was closed Friday by regulators and the Federal Deposit Insurance Corporation stepped in to operate a bridge bank. Even as US authorities took extraordinary measures over the weekend to shore up confidence in the financial system, the failure of the tech-focused lender may have lasting consequences for the industry.
“Even if the FDIC manages to find a buyer for SVB, its activities will likely be curtailed. At the same time, other US VC banks and lenders will be under tough scrutiny and will have a more difficult time deploying funds in the venture market,” Furlong said in the letter, which estimated that 10% of Canadian venture-backed companies had deposits with SVB.
–With assistance from Brian Platt.
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.