March 13, 2023: How Does the SVB News Impact You?

What is Minverva?

MinervaAI is a regtech platform powered by deep learning and automation to perform real-time client risk assessment.

Our customers use the platform both for end-to-end AML risk management and to fill gaps in their current AML tech stack. MinervaAI is 300X faster, 99% accurate, and about 100X cheaper while providing actionable insight in less than 20 seconds. The outputs provide an impeccable audit trail with full data lineage so our clients are able to demonstrate compliance to their regulators.

What was the insight/inspiration that led you to launch it?

My daily experience. We were spending millions on building and buying systems that created more and more work for analysts and investigators, but we really hadn't moved forward in over 20 years on solutions that would accelerate the investigation process AND improve the outcomes. We were just bogging humans down with more data and no insight. It was making me crazy.

How has it been received by the market? Why do you think it has been so well received?

I think that is an answer in three parts:

MinervaAI enables its clients to radically lower compliance costs (that's attractive), accelerate growth by letting the right customers in faster, and improve the accuracy and quality of its AML risk management.

How did you know you were ready to found a company?

I'm not sure that "being ready" is a thing, at least not for me. It didn't really feel like it was a choice. It had to happen.

How did you meet your founders/know they were the right people to start a company with?

I've worked with one of my co-founders, Victor, for about a decade, and we, collectively, banged our heads against the same wall (work) for years. We had been through several work and life milestones together--I knew we could do it. Our third founder, Damian, was one of the best introductions of my life, next to the person who introduced me to my husband. He saw what we wanted to build and what we could become. It was pretty frickin' magical.

What has been the hardest thing on your journey so far?

I'm not sure there is one "hardest thing" but the pendulum swing of "things are great" to "things suck" and back again can be rough. You have to be a true believer and gut it out when things seem grim.

What has been the most pleasant surprise?

The generosity of the community in sharing experiences, networks, ideas, and their time--especially other founders.

Their kindness can be overwhelming (in a good way).

What is your super strength?

Curiosity and empathy; employed together people will tell you what's true and real. It makes me a really good diagnostician.

What are you trying to achieve over the next 12 months?

We must grow our company and scale our business; it's a bit of a dance. We have a segment or two we will crack.

What advice do you wish you had been given prior to launching?

It's normal to be freaking out inside. You don't need to pretend you aren't doing something amazing, crazy, and scary.

What is your proudest accomplishment outside of your startup?

Happiness. I worry and fret and stomp my feet but I'm grateful and happy for the fullness of my life.

*image credit: Bloomberg Finance

Everything you need to know about the latest collapse of Silicon Valley Bank:

The big question remains:

Some context to this write-up:

The last few days have been tiring, and they were spent talking with founders, VCs, and other stakeholders.

We are writing this Sunday evening after the FDIC intervened to make SVB depositors whole. These are our initial thoughts and reactions. They will most likely change over time, so share your opinions with us by hitting reply to this email.

What is the news?

The 16th largest bank in the US by AUM (assets under management), Silicon Valley Bank "SVB", suffered from a bank run and was taken over by the FDIC on Friday.

SVB was one of the largest banks in the US tech ecosystem and had a presence in Canada and the UK. In the US, many start-ups and VCs used SVB products, mainly banking accounts, with large amounts of capital deposited with SVB, lines of credit, and/or venture debt. When the bank was taken over by the FDIC it froze assets and depositors were only guaranteed to get up to $250k USD of cash back when it reopened.

In Canada, most start-ups that were SVB clients only had venture debt agreements with them as SVB could not offer Canadian deposit accounts. Sunday night the FDIC announced they will make all capital held in accounts available Monday morning. Meanwhile, in Canada, the OFSI took temporary control of SVB Canada. The FDIC actions removed uncertainty and fear for many founders who were worried about meeting their financial obligations to employees (e.g. payroll) and other stakeholders.

What is the immediate impact of these events?

The largest outstanding one is start-ups that had a venture debt agreement with SVB and have not called on the capital to no longer have access to that venture debt. This hypothetically shortens the runway for these start-ups until they can arrange for another financial institution to provide venture debt - more on that below. Likewise, several VCs that had lines of credit to take advances against management fees or capital calls have lost the ability to use those facilities. This may mean that it takes slightly longer for VC firms to finalize their investments in companies. Many start-ups will be moving their US-based accounts from SVB to other financial institutions this week.

What is the long-term impact?

Many founders and VCs had a stressful weekend making plans for something that failed. Something they didn't think would fail.

They most likely have some form of sleep deprivation and PTSD. Before Wednesday no founder worried about their bank having liquidity issues and the risk of concentrating deposits in one bank. They now have to worry about this and most likely will be asked to think about other parts of the business they took for granted.

E.g. what is your contingency plan if your cloud infrastructure provider permanently goes down? 

It is not likely that Amazon, Microsoft, or Google goes down tomorrow but it is not zero percent. This complicates the job of founders and will add another layer of due diligence from investors, employees, and customers. Venture debt will become a bit more scarce or expensive in the short to medium term. One of the largest / most aggressive lenders is no longer operating and what happens when there is less competition? Supply shrinks and the price goes up. Likewise, VCs have less access to facilities that improve their returns and delay capital calls. LPs may also be a bit shell-shocked and slower to commit to new funds.

This may have a marginal impact on the pace of investing and valuations. The impact on valuations may be countered by a slowdown in interest rate hikes by the Fed.

Interestingly, there is now market share available for the taking across all these products which may encourage several Canadian financial institutions to re-commit to the market.

*We have reached out to several Canadian financial institutions to learn more about their plans and will do a live stream of quick takes with any and all that want to talk about what they plan on doing.

Fintech adoption accelerated over the weekend and will most likely continue to accelerate as start-ups find solutions to the new transaction and overhead costs associated with managing capital. Because FDIC insurance is per account, not per individual customer, several neo banks increased their FDIC insurance by opening many separate accounts for customers and then providing a "wrapper account" that allows you to interact with all of them as if they were one account.

What does the community have to deal with?

Tech has a PR problem. The loudest founders with the strongest opinions are the ones that the general public associate with our industry. This was causing political issues this weekend. We need to ensure that we promote leaders and voices that represent the wider community and that we make sure that society as a whole benefit from what we do. In Canada, we need to ensure that what happened with SVB does not result in a step back from an open banking platform or over regulation that prevents fintech innovation.

*This continues to be a developing story and we will keep the community updated as we learn more.

Listen to the latest episode of Quick Takes

Quick Takes returns LIVE with a brand new episode on March 23 at 12:00 pm ET/9:00 am PT across the TechTO platforms.

Catch up on past episodes here, and subscribe wherever you listen to your podcasts.

• #ICYMI - Catch up on past newsletters if you hadn't yet subscribed!

• More Canadian Startup News for the week ahead >> READ MORE

• Congruence Therapeutics closes $20m extension of Series A >> READ MORE

• How a Toronto-made AI therapist could help the mental healthcare system in Canada >> LEARN MORE 

• How the SVB collapse is affecting this Canadian Ad-Tech firm >> READ MORE

• Ontario to introduce mandatory technology credit >> READ MORE

• A 10-step playbook for Founders with accounts at Silicon Valley Bank >> READ MORE

Full Stack Engineer, Coinsmart (Toronto, ON)

Why is this cool? CoinSmart is on a mission to make cryptocurrency accessible to everyone. Breaking down the barriers of complex and confusing crypto transactions, CoinSmart offers simple solutions, learning tools for all levels, and excellent client support. The role will work largely independently, as well as working with remote team members, product owners, and stakeholders to implement technical solutions to meet business objectives and requirements >> APPLY HERE

iOS Developer, CrowdRiff (Toronto, ON)

Why is this cool? CrowdRiff is built around the idea of pushing the boundaries of exploration, and their dedication to finding experiences that feel more authentic and undiscovered makes them unique. CrowdRiff is empowering destination marketers to showcase their unique destinations through powerful visual storytelling solutions. They are looking for an iOS Developer enthusiastic about building new features in their first native mobile app: Localhood. In this role, you will have an opportunity to build on a product that allows creatives to build Web Stories (https://stories.google) about their travel experiences and help over 800 destinations inspire people when they get ready to travel again >> APPLY HERE

Co-Founder and current CEO Dan Holowack sat down with our team to discuss the culture and dynamics at CrowdRiff - LEARN MORE HERE

Check out the interesting content, events, and happenings for the community here:

• TechTO Special: Web3: March 22, 2023 - Learn all about one of the hottest topics in tech from the top innovators in the business >> REGISTER HERE

• Best of TechTO Returns! April 3, 2023 >> REGISTER HERE - Limited early bird tickets available!

• *EXCLUSIVE TECHTO INSIDERS SOCIAL: April 13, 2023 >> Learn more about how to attend on our website >> LEARN MORE

• HealthTO: Privitization - April 19, 2023 >> REGISTER HERE

• TECHSPO Toronto: May 18-19, 2023 - Where business, tech and innovation collide >> REGISTER HERE

Want to showcase your company, events, and opportunities to 60,000 subscribers across the Canadian Tech Eco-system? Reach out to [email protected] to learn more!