The collapse of Silicon Valley Bank shows that technology startups should be doing more due diligence on their banking partners, according to one of Australia’s biggest venture capital firms.
(Bloomberg) — The collapse of Silicon Valley Bank shows that technology startups should be doing more due diligence on their banking partners, according to one of Australia’s biggest venture capital firms.
Paul Bassat, co-founder of Square Peg Capital, which manages $3 billion in assets, said SVB’s demise is a “real opportunity for all of us to think about the risks we’re taking, and to mitigate those risks.”
“You need to understand who the bank is who you bank with, you need to understand risk mitigation, you need to have your deposits spread across a range of different banking institutions, you don’t want to have exposure to a single organization,” he said in an interview on Bloomberg TV Tuesday.
Square Peg manages $3 billion in assets and invests in companies including Canva Inc., one of the world’s most valuable private software companies.
Bassat said that regulators’ decision to guarantee deposits for SVB’s clients means dealmaking and fundraising for startups should continue in a muted market where valuations had already come off.
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