The trickle effect: what the collapse of Silicon Valley Bank means for early-stage Canadian founders

Now that the initial shock has settled from the second-biggest bank collapse in U.S. history, we can start to process what the demise of Silicon Valley Bank means for the Canadian startup ecosystem. And while a majority of the Canadian tech sector will come out of this relatively scot-free, there will undoubtedly be a trickle effect that will impact founders north of the border.  

The downfall has created an environment of uneasiness for the startup community, and founders are concerned that this will spook investors. 2022 was a challenging year for startups, and while there were small glimpses that we were on the up-and-up, an event of this magnitude does not help the perception of the space. Just from a mere 2 weeks ago, founders are feeling an increased sense of uneasiness. 

It’s important to remember that the ecosystem has been fighting inflation and rising interest rates. In an industry where cash is king, founders were already hanging on for dear life.

So, what’s at stake? Stunting the growth of early-stage founders. In times like this, investors become more risk-averse and want to make safe bets, meaning funding supply at the top of the funnel becomes rare. While many Canadian founders may not have dealt with Silicon Valley Bank directly, losing a key player in the space translates to less funding to go around overall. 

Now is the time to double down on high-potential early-stage founders and their businesses to fuel their growth. Supporting startups when the ecosystem is on a high is one thing, but helping them through bad times is a whole new ball game. 

Early-stage companies are the lifeline to Canada’s startup and innovation ecosystem. At the DMZ we’re doing everything we can to equip our founders to be the next camel startup –  resilient, resourceful and balanced.

If you’re an early-stage tech startup looking for tangible support, learn more about our programs here.