Europe is on alert due to the possible spread of the financial tsunami caused by the failure of Silicon Valley Bank (SVB) and its impact on the technology sector. SVB was the main bank that many European startups worked with as they sought to invest in US dollars to minimize the effect of currency exchange and attract investment from large US funds. Many of these companies moved to the United States and partnered with SVB, making it a key player in the California entrepreneurial ecosystem.
Although most Spanish startups with international operations and those that brought their parent companies to the US worked with SVB, some companies acknowledge having limited or no exposure to the California bank. The fear of these companies’ inability to pay their payrolls has led many startups around the world to apply for bridge loans to guarantee their operability this week.
Despite the effect on venture capital funds, many Spanish funds have described the effect of the situation as limited and claimed that it only affects some of their investors. European companies have diversified their operations, and a large part of their cash is in banks on the Old Continent. The Fed’s action, which guarantees 100% of deposits and tries to shield the liquidity of the rest of the entities in the sector, is also a reassuring factor. However, the failure of such an important bank is a very powerful signal, and investors are expected to be even more cautious when investing in startups.
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