Proptech VCs and startup founders already struggling from the housing-market downturn are now reeling from the Silicon Valley Bank collapse
Companies that borrowed from the bank are unsure about their future cash runways, or lifelines.The overnight collapse of Silicon Valley Bank after ais creating yet another set of problems for an already ailing venture tech environment.
Top of mind for proptechs is contagion to the regional banks, which provide the lifelines for startups as they move toward profitability. Specifically, the worry is that regionals — major funders of real estate and real estate investors — will become more restrictive on lending to proptechs and their customers, according to one venture capitalist who is advising their portfolio companies on how Silicon Valley Bank's failure will impact them.
Proptechs could also face a cash crunch as a result of the closure, as open lines of credit with Silicon Valley Bank — and possibly other regional banks — are suddenly in limbo.of so-called venture debt, or debt that startups can raise along with their equity rounds of funding. Rascoff said real estate and tech companies were already struggling after the"easy money," or low-interest rate funding of the past several years, was stripped away in 2022. The Silicon Valley Bank collapse"just punctuated it," he said, of the financial duress.Venture debt in proptech, where an investor pumps money into a startup and earns interest on a loan, instead of receiving a stake in the company.
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