This is Bloomberg Business Week with Carol Messer and Bloomberg Quick Takes Tim Stenovich on Bloomberg Radio. On the Bloomberg Today is a story about how Silicon Valley Bank help close the funding gap for women and minority founders. Are Kelsey Butler reporting it out. SVB, which had relationships with more than fifty percent of all venture back companies in the US, built a reputation for working with businesses owned by female, Black and Latin X professionals, often when other
banks would not. So we want to dig a little bit deeper into this with us as Kathy Park, She's partner at the San Francisco based venture capital firm Andrew Capital. They have invested in the likes of Palanteer, Sophi Stripe. I can't read my notes, grub Market and more. It's been a long day, sorry, Kraken, is what I wanted to say. I just couldn't get it out. She's here in our Bloomberg Interactive Broker studio. She is based in
New York. Kathy, great to have you here. It has been a little bit fast and furious on this Thursday. First of all, how are you and how are you reading? One? Of the tea leaves and some of the headlines when it comes to what happened with Silicon Valley Bank, concerns about venture and money for startups because of that collapse, and then just the bigger, broader banking situation, kind of the nervousness that's out there. Sure, sure, and thanks for
having me on. So I would say that it's it's crazy to think about the fact that this whole SBB situation has literally just been a week. And so in the very beginning, I think there was a lot of panic and a lot of concerned. It's a fairly small circle, so, um, just a little bit of context around and Andra is a growth and late stage equity fund. We focus on Silicon Valley pre IPO technology companies and we were originally founded with the mission of democratizing access to these types
of PREIPO companies. And so for US, Silicon Valley Bank is it's just a household name in the valley. It funds, as you pointed out, Carol funds fifty percent of start up and so there's a lot of panic because people have both deposits, people take out mortgages from them, and it impacted individuals on multiple levels, and so when the run of the bank happened, initially, I think there was a lot of concern and a lot of The first question we asked is how much exposure do we have
to SVB? And then the secondary question is how much do our portfolio companies have exposure to SVB? How much did you guys have? The good news is zero directly, and we only had a couple of companies that had exposure, but nothing where we were concerned because they had loans and so we did have one company that had fairly
large cash balances there. But the good news is by Sunday, I think between Chairman Secretary Yellen and the FDIC, they had already come in put the markets to rest, basically contained the contagion, if you will, Yeah, and that gave us a lot of it. We were able to finally basically take us a sigh of relief by day because we knew that people would then be able to access not only the two fifty two hundred fifty K of deposits,
but the full amount, and so that was good. We'd also been able to connect with the companies and just in just confirm that they were in okay shape. So so that's so that was the near term right now, what we're saying is um, while it is concerning, I think people at least feel like there are some breaks on.
We know that the government, maybe having learned from the GF the great the financial crisis before, understands what the rule book looks like, even down to having the equivalent of help but having these funds available rum so that they will buy securities back at par including treasuries and things like that. So so that's great. Um. Now what
does this mean though after this near term panic? And so it's um And just to turn this towards a lot of the women in minority UM startups, so who struggled to begin with you having to it and have been on a mission, but you do wonder, right, So this is our concern. It is it was already hard enough for women and people of color to tap into the system. They're not part of this club in Silicon
Valley and there was increasing focus. Now the concern that we have is if banks and lenders become even more conservative, they're going to just continue the path that they went on before, but be even even more so. Right so, what we worry about is that some of these ventures that maybe don't look in and don't quite fit into the mold of what you think a traditional venture, you know, founder looks like um or business models that might serve
communities that maybe are not the mainstream in America. Those are the companies that we think are going to struggle a little bit more to get funding. And so, if anything,
it's very important. I'm so glad we're talking about this today because it is important for people to, you know, instead of just pulling back to really think about maybe we should lean in more and really focus on this and make sure that that we're not essentially right after making some progress, yes, in the last few years, and so so that's I think that's kind of where we're We're what we're trying to focus on. Well, yeah, Kathy, and I mean, the good news obviously is that those
deposits are safe now. But even before that acute bank run on Silicon Valley Bank, there was sort of a slow draw down of the cash in these accounts that startups were burning through cash really and the assumption was that okay, maybe you got that first round of investment, second round, that that was starting to dry up. And I wonder if that's accelerating the problem. Obviously, I would
assume this failure is accelerating that problem. But what sort of the climate there is there, especially for someone who invests late stage. I mean, if not, you're fun. But is there this major risk of just the purse strings being completely tightened among VC firms right now, especially if the IPO market two isn't there for an exit. Yeah,
So so here's the concern. So just keep in mind in the VC space, they there is a statistic I think they have roughly close to six hundred billion of dry powder that they've raised, and so there's a lot of that. There's a lot of capital available to fund
very early stage companies, and you're absolutely right, Mike. So now we're focused on these later stage companies or growth companies that are sort of maybe on their Series d ef rounds, and with the IPO markets closed most a lot of the companies that we're focused on are really twelve to thirty six months prior to IPO and with that market closed, and also with the lack of I guess cheap funding right because interest rates have now gone up, what we're finding is that companies have had to re
orient a bit more from growth at all costs, more towards profitability and showing that they can reduce their cash burn in order to be public public public companies. And so you're right, there's been a it's been a slow and steady move towards i think trying to essentially conserve cash, and so they have drawn more on the bank lines
than they had in the past. The real question will be is there is there enough of a correction in valuations on these companies to create really interesting investment opportunities so that people come in. Right now, there's a bit of a bid ask spread between where company valuations have to date and where people see, you know, fair value as as being um and as that gap starts to adminish a bit more, we do anticipate that money will come back in on the onder side. Frankly, that's what
we're also looking for. We have we have a wish list of companies that we find really attractive and interests, and so we do think that with a little bit more, maybe a little bit less exuberance in valuations, that will present a lot of very interesting opportunities. When you talk about valuations, we've just got about thirty seconds. Are you talking about a ten percent twenty percent pull in on It depends on the company. Okay, so it all depends
on where the last round is, and it's uberance. You're saying, we're up there. Yeah, we have it, And then we had to start to see a lot of correction actually at the beginning of this year. Now, I think the concern is people are so frozen they don't no one wants to catch that proverbial falling knife. And so in some cases maybe it is only ten percent. In other cases it could be a lot more than that. It
could be, you know, north to thirty percent. Do you think the IPO market at all picks up later on? This year just got about ten seconds, So I think the answer is it's anyone's bet. But I think the wishful thinking is that we hope, so we really do. We could use that reply to so many different That is such a great way of like our environment. Kathy Park, come back soon. This is really great. Thanks really appreciate
for having me. Kathy Park. She's partner at Andre Capital, joining us here in our interactive broker studio.