US Entrepreneurs Warn of Fallout from SVB Collapse for Small Latino-Owned Businesses

According to the United States Hispanic Business Council, the effects of the bank’s failure will be felt by the Latino-owned business community in the US

A Silicon Valley Bank branch in San Francisco, California, US, on Monday, March 13, 2023. The collapse of Silicon Valley Bank has prompted a global reckoning at venture capital and private equity firms, which found themselves suddenly exposed all together to the tech industry's money machine.
March 15, 2023 | 11:30 AM

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Bloomberg Línea — Following the collapse of Silicon Valley Bank (SVB) (SIVB), the United States Hispanic Business Council (USHBC) has warned that “the impact will undoubtedly be felt in our small business community”, the USHBC’s president and CEO Javier Palomarez said.

According to Palomarez, the impact will be seen from small Etsy sellers to startups, as access to revenues and capital will be disrupted.

“USHBC recognizes that many of our constituents are legitimately concerned, we remain hopeful and stand ready to assist affected businesses,” he said. “We are confident in the stability of our nation’s banking industry and believe this incident has highlighted the importance of having reliable banking partners with safe and effective banking strategies.”

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He highlighted the strength of other financial players such as Zions Bank, a USHBC partner.


“While U.S. regulators have provided assurances that SVB clients will recover [their funds], USHBC believes this serves as an important lesson for the financial industry, and provides insight into what creates a stable banking environment. With this in mind, we implore other financial institutions to follow the lead of Zions Bank and others like them in maintaining a stable, safe and effective financial services ecosystem,” he added.

The knock-on effect for Latino companies

SVB was the favorite bank of the entrepreneurial ecosystem, especially Latin American companies, since they could deposit millions of dollars raised in investment rounds, and which is why startups in the region are on alert in the wake of the bank’s collapse.

Alberto Rodríguez, founder and general manager of Chilean startup Levita Magnetics, told Bloomberg Línea that “fortunately” a minority of his money is being held in an SVB account, and the uncertain situation forced him to take extreme measures such as making advance payments to workers and suppliers for fear that the crisis would spread to the financial system.


Carlos Aravena, CEO and co-founder of Chilean education platform Políglota, says that the SVB was for “many Latin American entrepreneurs the main gateway to the US market” because the bank demanded fewer requirements for operations within that country.

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Políglota has an account with SVB, but managed to get all its funds out in time because an investor informed Aravena about the organization’s situation, and now the company is keeping his account on “stand by” until more information is obtained.

Startups Houm and Xepelin also managed to get their money out before the collapse.

Argentine satellite company Satellogic told Bloomberg Línea that “SVB was a secondary bank for us, and we maintain minimal cash balances with them, well below FDIC limits.”


Some Colombian entrepreneurs also have funds tied up in SVB, such as Alexander Torrenegra, founder of remote work platform Torre (which raised $10 million in a seed round in 2021); Daniel Bilbao, leader of identity verification startup Truora (which raised a $15 million Series A in 2022), and Rubén Córdoba, CEO of employment platform HoyTrabajas, which raised a $3.5 million seed round in 2022.

For their part, founders of Brazilian startups - even those who had more than $250,000 in SVB, under the intervention of the FDIC, managed to withdraw all their funds from the stricken bank.

Brazilian startups’ money in SVB has been transferred to large banks such as JPMorgan (JPM) and Morgan Stanley (MS) to smaller ones such as Mercury and to fintech Brex, owned by Brazilians Henrique Dubugras and Pedro Franceschi. Another option has been to exchange the money into reais and move it to Brazil.

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