‘We would have liked to have had Silicon Valley Bank in the Netherlands’

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‘We would have liked to have had Silicon Valley Bank in the Netherlands’

It would have been close if the bankrupt Silicon Valley Bank had had a branch in the Netherlands. That is what Prince Constantijn van Oranje says in conversation with BNR. As a special envoy for TechLeap, he represents the interests of Dutch tech companies. A bank like SVB would have been useful for start-ups and scale-ups here. “They offer loans that are not really offered at the moment.”

Prince Constantine of Orange (BNR)

According to Constantijn, the need for venture capital is great. ‘You already have venture debt in England and other places, but not so much in the Netherlands yet. We would also like to see that category of funding here,’ says the TeachLeap foreman.

Also listen | BNR’s Big Five – Prince Constantijn (TechLeap) on the Dutch tech climate

SVB had to deal with a real bank run last week. That happened after the bank had announced that it needed more than two billion dollars to support the finances. Private clients and asset managers tried to recover 42 billion dollars, but SVB did not have that money.

Fallout

Due to the bankruptcy of SVB, a number of Dutch companies have lost money. For example, biotech company Pharming had parked a quarter of its total capital at the bank. ‘Pension fund APG has lost 100 million euros, but a small amount on the entire portfolio,’ says Constantijn. ‘Of course we don’t yet know what the total fallout will be. It may still go on. Two other banks have also collapsed. Others are endangered, so it may well get a tailspin.’

Also listen | Macro with Boot and Mujagić – Rescue SVB costs taxpayers nothing? ‘There’s no free lunch’

Credit Suisse

According to Constantijn, the problems at the Swiss bank Credit Suisse are different from the problems at SVB, but the tension is increasing due to rising interest rates. ‘If you have invested a lot in bonds with very low interest rates and you run into solvency problems at a certain point, you have to sell it at a loss. That’s what happened in Silicon Valley,” he says. ‘Banks that have not properly anticipated current interest rates can get into trouble.’

It would have been close if the bankrupt Silicon Valley Bank had had a branch in the Netherlands.  That is what Prince Constantijn van Oranje says in conversation with BNR.
It would have been close if the bankrupt Silicon Valley Bank had had a branch in the Netherlands. That is what Prince Constantijn van Oranje says in conversation with BNR. (ANP / Fotopersburo Edwin Janssen)

Unique sofa

In his eyes, Silicon Valley Bank was a “quite unique” bank. ‘It was set up to finance tech companies and that was connected on all sides in the system. So they invested in the funds, the funds banked with Silicon Valley Bank, the funds invested back in the companies, the companies banked with Silicon Valley Bank again.” As a result, the method of financing was often the same. ‘If a few large funds then tell their companies to withdraw their money, things can move quickly. In 24 hours we had a bank run that brought down a leading institution.’

That is why diversity is very important, he thinks. Both in terms of the type of companies and the forms of financing. ‘You want this to be done by different providers. If you all bank with the same institution, you really run the risk of system failure.’


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