5 min - Mar 12, 2023

Info for Canadian SaaS Startups on Silicon Valley Bank

First published March 12, 2023 11:45 am EDT
Last updated Mar 13, 2023 9:15 am EDT

by Lauren Thibodeau

As a member of the Canadian SaaS ecosystem who cares deeply about the growth and success of Made-in-Canada innovation, wanted to share some timely info for Canadian SaaS companies.

Like you perhaps, I’ve seen crises like the one we’re witnessing with Silicon Valley Bank bring out the good: people sharing info, banding together with quick solutions, and the bad: less scrupulous companies jumping in with excessive interest rates or poor deal terms when founders are in a tight spot. Both are happening right now.

So my goal here is to share timely information that can help Canadian SaaS startup founders.

Why Did It Happen?

Before SVB was shut down, Canadian John Ruffolo, Co-Founder, Council of Canadian Innovators, Founder, OMERS Ventures, and Founder & Managing Partner at Maverix Private Equity shared his concerns and perspective on LinkedIn.

He since followed up with this post:

Here’s a more detailed explanation in a LinkedIn Post from Samir Kaji, who worked at SVB from 1999 – 2012, and whose wife still works there. He indicates his update is based on filings, the news, and numerous conversations he’s had with VCs in the industry.

He’s also got a good Twitter thread with more info:

What’s The Impact to Canadian SaaS Startups?

BetaKit’s Meagan Simpson and Douglas Soltys published an article on Mar 10 that shares some early perspective:

“With SVB the main bank for startups in the United States (US), and its 16th-largest bank, the impacts on the country’s tech ecosystem may be sizeable.

In Canada, SVB plays a different role, as it does not have a banking license and only provides venture debt locally. As such, unlike their American counterparts, Canadian-domiciled companies likely won’t have their funds with the bank.

However, Canadian startups that have their US banking with SVB, or ostensibly Canadian companies that are legally domiciled in the US for tax purposes and use SVB, will be impacted by the bank closure.” – BetaKit, March 10.

Global News published an article Mar 13 (7:55 am EDT) stating that:

“Canada’s banking regulator has temporarily seized the assets of Silicon Valley Bank’s lone Canadian branch after the financial institution collapsed.

In a statement released Sunday, the Office of the Superintendent of Financial Institutions (OSFI) said Silicon Valley Bank’s Toronto branch has been primarily lending to corporate clients, and that the branch does not hold any commercial or individual deposits in Canada.”

“Deputy Prime Minister and Finance Minister Chrystia Freeland said in a statement on Sunday night that she had spoken with Canadian financial sector leaders and the Bank of Canada, and that the country’s “well-regulated banking system is sound and resilient.”

Meanwhile, OSFI said it has closely monitored Silicon Valley Bank’s Canadian branch since the onset of the bank’s difficulties. It added that consistent with globally accepted international Basel III standards, it “continues to undertake diligent supervision of federally regulated banks in Canada, including robust requirements for capital and liquidity adequacy.””

Where Can You Get Info from Official Sources

1. FDIC Announcement of Bridge Bank Creation – First published Mar 13 am

2. Joint Statement by the Department of the Treasury, Federal Reserve, and FDIC – First published Mar 12 ~6 pm EDT

3. CBC News – Canada’s Top Banking Regulator Takes Temporary Control of SVB Canadian Branch – First published Mar 11:56 am EDT

4. FDIC FAQs – Last updated Mar 12

5. FDIC Press Release – First published Mar 10

What Can You Do About It?

Assuming you’ve already reached out to your investors and/or lenders, you can also:

1. Check out ideas from SaaSCan on extending your runway whatever the reason: economic downturn or liquidity crunch. This article continues to be updated in real time as more ideas are shared.

2. Get in touch with reputable Canadian institutions such as the three below to discuss options:

  • BDC – Provides Canadian entrepreneurs with flexible financing solutions and expert advisory services. Can often provide better rates than other institutions.
  • TIMIA Capital – Headquartered in Vancouver, BC. Provides non-dilutive growth capital to recurring revenue technology businesses between $2 – $20 million. Their alternative financing solutions enable founders to keep as much equity in their business for as long as possible.
  • RBCx – Has a number of leaders originally from Silicon Valley Bank who are well versed in venture debt solutions for SaaS companies.

3. Reach out to the Council of Canadian Innovators’ President Benjamin Bergen at bbergen@canadianinnovators.org.

CCI lobbies the Federal Government to better support Canada’s Innovation Ecosystem and your voice may help here right now. CCI’s mission is to “advocate for policy that spurs innovation and helps domestic tech companies gain greater access to talent, capital and customers.” Here’s his recent LinkedIn post.

Transparency Statement:

None of the companies listed here provide any financial support to SaaSCan. TIMIA Capital is a SaaSCan Research Distribution Partner and distributes SaaSCan research to its audience at no charge.

About SaaSCan

SaaSCan for Scaleups helps scaling North American SaaS companies increase revenue and improve the customer & employee experience through scaling Customer Success, and Customer Journey Mapping.

 

Recent Insights

Early Stage Growth
Startup

SaaS and Tech Company Valuations, with Ed Bryant

2 min - Feb 23, 2024
Early Stage Growth
Research
Startup

The SaaSCan Guide to Accelerators and Incubators for Canadian ...

1 min - Nov 19, 2023
Early Stage Growth
Research
Startup

The SaaS Metrics That Matter Most for Startups in 2024

1 min - Nov 13, 2023

SaaSCan™ Insights

Get the latest research and insights from SaaSCan.

* indicates required

Back to top