The collapse of the Silicon Valley Bank (SVB) may seem like it only affects entrepreneurs in the technology industry, but it actually has significant implications for entrepreneurs in other industries as well, including healthcare services business. SVB was also somewhat of a leader in helping Black founders within the tech ecosystem scale their businesses. Here are five ways you can expect the collapse to affect your business. But don’t get discouraged! After discussing the effects of the collapse on your business, I will also share some things you can do (and I have ensured are in place for my business) to counteract these effects.
5 Knock-on Effects of The SVB Collapse
1. Potential Reduction in Access to Capital
Just like their counterparts in the tech industry, entrepreneurs in the medical industry rely on venture capital to fund their ventures. With the Silicon Valley Bank’s collapse, there will be one less source of capital for these entrepreneurs. You may find it more difficult to secure funding, and you may need to look elsewhere for investment.
2. Increased Scrutiny from Investors
With the Silicon Valley Bank’s collapse, investors in the medical industry may become more cautious and risk averse. This means that entrepreneurs will need to be even more prepared to demonstrate their viability and potential for success. You may need to undergo more rigorous due diligence processes and be able to present a compelling case for investment.
3. Greater Competition for Investment
With one less major player in the venture capital industry, entrepreneurs in the medical industry may find that there is greater competition for investment dollars. This may make it more challenging to secure funding, and they may need to work harder to differentiate themselves from their competitors.
4. Changes in Loan Terms and Conditions
The Silicon Valley Bank has been known for offering favorable loan terms and conditions to entrepreneurs in the medical industry. With its collapse, entrepreneurs may find that other lenders are less willing to offer the same terms and conditions, or that the cost of borrowing has increased.
5. A Shift in Entrepreneurial Culture
Finally, the collapse of Silicon Valley Bank may lead to a shift in entrepreneurial culture in the medical industry. The bank has been a significant driver of innovation, and its absence may lead to a more cautious, risk-averse approach among entrepreneurs. Alternatively, it may lead to a more innovative and disruptive approach as entrepreneurs look for new ways to finance their ventures.
The collapse of Silicon Valley Bank will have significant implications for entrepreneurs in the medical industry who are not in the tech industry at all. However, with change comes opportunity, and those who are willing to adapt and innovate will be best positioned to succeed in the new landscape.
5 Steps Entrepreneurs Should Take to Secure Funding in a Post-SVB World
1. Diversify Your Funding Sources
One of the most important steps you as an entrepreneur can take is to diversify your funding sources. This means exploring new sources of funding beyond traditional venture capital. This may include crowdfunding, angel investors, and non-traditional lenders.
2. Build Strong Relationships with Investors & Bankers
Building strong relationships with investors is crucial in a post-SVB world. It’s more important now than ever that you focus on building a network of investors who understand your industry and are interested in supporting your vision. This may require attending networking events, pitching to investors, and seeking out referrals. Now First Citizens Bank (FCB) has acquired SVB, keeping customers’ needs is a priority in this early stage of acquisition. So, if you still bank with SVB, now is the time to engage FCB and leverage their priority to build a strong and better relationship with you.
3. Focus on Profitability
In a world where investors are more cautious, profitability is key. Focus on building a sustainable business that generates profits and more risk-averse projections. This will not only make your venture more attractive to investors but will also provide it with the resources you need to grow your business.
4. Leverage Government Grants & Programs
Many governments offer grants and programs to support entrepreneurship. I encourage you to explore these opportunities to secure funding and support. This may include grants for research and development, tax incentives, and other forms of government support; as well as contracting with the government.
5. Embrace Disruption and Innovation
Finally, you should embrace disruption and innovation. In a post-SVB world, traditional funding sources may no longer be available, and you will need to explore new ways to finance your ventures. This may require thinking outside the box and exploring new business models.
In conclusion, the collapse of the Silicon Valley Bank has left many entrepreneurs scrambling to secure funding for their ventures. Yes, this can be scary. However, by diversifying funding sources, building strong relationships with investors, focusing on profitability, leveraging government grants, programs & contracting opportunities, and embracing disruption and innovation, entrepreneurs can counteract the effects of the SVB collapse and secure ongoing funding for their ventures.