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Lenders Seek to Fill SVB’s Shoes
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By Yuliya Chernova, WSJ Pro
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Good day. Recent bank failures are generating new demand from startups for other financing providers.
For instance, about 35 companies have reached out to i80 Group since March 9 seeking a total of $1.5 billion in credit lines, said Marc Helwani, the lender’s founder and chief investment officer. That represents almost as much as all of i80’s current business, he said, adding the companies had taken out loans from Silicon Valley Bank or Credit Suisse and are looking for other options.
i80, which provides asset-backed warehouse lending facilities, expects to convert some of that pipeline into deals in the next couple of weeks, Mr. Helwani said.
Borrowers can expect to pay more for loans than they are used to, he said.
SVB could provide relatively cheap capital to very early-stage businesses because it had bank deposits as its own source of capital, as well as banking products that increased revenue it could generate per client. Other lenders likely won’t be able to match SVB’s offerings.
“There’s no question that the cost of capital goes up,” Mr. Helwani said. He estimated the cost of debt will be roughly 300 to 500 basis points above what borrowers saw from SVB.
Switching to other financing providers won’t happen overnight, because SVB borrowers still have access to their credit through Silicon Valley Bridge Bank, the entity federal regulators set up to manage SVB accounts. The bridge bank is also making it easier for borrowers to stay by relaxing deposit requirements, WSJ Pro reported last week.
Still, SVB borrowers can’t ignore that the bridge bank’s assets are being auctioned and its future is uncertain. That’s why borrowers are standing up parallel debt facilities with other lenders.
“You are going to hold your nose until the music stops,” Mr. Helwani said, referring to SVB borrowers. “Then you gotta pay market.”
And now on to the news...
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Many investors think the rally in bitcoin won’t last—and have placed bets against the token’s price. PHOTO: AL DRAGO/BLOOMBERG NEWS
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Bitcoin bounces back. Bitcoin was all but left for dead after the implosion of crypto exchange FTX, but its recent rally is proving naysayers wrong, The Wall Street Journal reports. The world’s largest cryptocurrency has risen 21% so far this month on the back of the banking crisis, bringing bitcoin’s rally to almost 70% so far this year. Bitcoin traded above $28,000 on Sunday for the first time since June.
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Bitcoin has surged despite a federal regulatory crackdown on crypto companies and an increasingly risk-averse market environment.
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Many investors think the rally won’t last—and have placed bets against the token’s price.
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$363,000
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The national median existing-home sale price, which fell 0.2% in February from a year earlier, the first year-over-year decline since February 2012.
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Google Launches Bard AI Chatbot to Counter ChatGPT
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Google is opening public access to the conversational computer program Bard, its answer to the viral chatbot ChatGPT, while stopping short of integrating the new tool into its flagship search engine, WSJ reports.
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After years of development, Google on Tuesday said it would expand access to Bard to more users in the U.S. and U.K. The move intensifies the battle between Google and Microsoft Corp. to dominate the release of advanced artificial-intelligence tools that can be used to generate humanlike text responses.
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Chip Makers Find Out How to Get 25% Investment Tax Credit
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The Biden administration moved to implement a new 25% investment tax credit for U.S.-based semiconductor manufacturing and proposed restrictions that would make it difficult for companies to expand China operations if they receive certain federal funds, WSJ reports. Congress created the tax credit and chip-maker subsidies last year as part of a package aimed at boosting U.S. competitiveness in semiconductors. The legislation came in response to a chip shortage during parts of the pandemic and to concerns about relying on other nations for such components.
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People
Austin, Texas-based growth-stage investor Elsewhere Partners appointed John Doyle as vice president. He was previously vice president at Frontier Growth.
SaaS security provider AppOmni appointed Biswa Panda to the post of chief development officer and promoted Allan Kristensen to chief customer officer. Mr. Panda was previously vice president of engineering at Exabeam. Prior to joining AppOmni, Mr. Kristensen was at Palo Alto Networks, RedLock, Citrix, Zenprise and Symantec.
Exits
Homeownership education portal Homebot acquired Quo Finance, a mobile app for first time homebuyers. Terms weren’t disclosed.
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Placemakr, a Washington, D.C.-based flexible-use multifamily and hospitality property operator, scored $65 million in new funding from investors including Highland Capital Partners, Harbert Growth Partners and Camber Creek. The company also named Timothy G. Franzen to the post of chief development officer. He was previously president of Graduate Hotels.
CAST AI, a Miami-based cloud-native automation and cost management startup, closed a $20 million investment led by Creandum.
Revolv, a San Francisco-based electric vehicle startup, completed a $15 million Series A round led by Greenbacker Capital Management. The company’s technology simplifies commercial fleets' transition to electric.
Coactive AI, a startup that helps data teams work with image and video data without requiring specialized machine learning skills, snagged $14 million in combined seed and Series A funding from Andreessen Horowitz, Bessemer Venture Partners and others.
IPRally Technologies, a Helsinki-based patent research and intelligence AI startup, secured a €10 million investment led by Endeit Capital.
ketteQ, a supply chain planning and operations startup with offices in Atlanta and Germany, raised $9 million in Series A funding. Vocap Partners led the round, which included additional participation from Circadian Ventures.
StructShare, an Austin, Texas-based construction procurement and inventory platform for specialty contractors, picked up an $8 million investment led by Kompas.
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TikTok’s data trackers were present in 30 U.S. state-government websites, a report shows.
PHOTO: ALYSSA SCHUKAR FOR THE WALL STREET JOURNAL
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