For three decades, Silicon Valley Bank has been one of the most preferred banking options for startups in the tech industry in Silicon Valley and around the world, mainly due to its understanding of the industry and flexibility in many aspects of the startup ecosystem. However, the collapse of the bank left many technology companies in the region in a state of deep financial stagnation, and in light of the fluctuations in the technology sector, including collapses in stock prices and layoffs, the collapse of the bank is likely to affect the emerging technology companies sector in the Middle East and North region. Africa in the short and long term.
The most affected Egyptian companies According to the “Enterprise” bulletin, which is a daily newsletter dealing with economic, investment and administrative affairs in Egypt, there are approximately 50 local Egyptian companies affected by the bank collapse, as a list was circulated among the concerned local managers and economists that includes the names of 46 emerging companies. and two venture capital firms (one of them global) that were funded through Silicon Valley Bank, according to an Enterprise source who declined to be identified. “I have no way of predicting how many local startups will be affected, but I can say it is definitely in the dozens.” This is what Bassel Moftah, who is the general partner of Nclude, told Enterprise.In addition, some startups in the region have reported difficulties in withdrawing their funds from the collapsing bank, and among the most prominent regional startups that bank on Silicon Valley Bank are Anghami, Careem, Holo, and Kitopi.
With the heightened uncertainty associated with the bank crash, a slowdown in overall startup activity is expected, and startups are not the only ones feeling the impact. Venture capital has also been affected by the repercussions. Issa Agabi, founder of the Access Bridge Ventures investment fund, noted that some funds also have management fees stuck there, exacerbating the negative impact. “It is possible that we will need to discover a new way to fund our day-to-day operations, and this could delay the flow of funds allocated to start-ups, which will lead to poor overall fund performance and much more.”
