The failure of Silicon Valley Bank shook the technological industry that had served as the bank’s backbone, leaving shell-shocked entrepreneurs grateful for the government respite that spared their money while they mourned the loss of a location that served as a chummy club of creativity.
“They were the gold standard, it almost appeared strange if you were in IT and didn’t have a Silicon Valley Bank account,” said Stefan Kalb, CEO of Seattle firm Shelf Engine, as he began shifting millions of dollars to other banks.
The Biden administration’s decision to guarantee all deposits above the insured limit of $250,000 per account resulted in a “palpable sigh of relief” in Israel, where its thriving tech sector is “connected with an umbilical cord to Silicon Valley,” according to Jon Medved, founder of the Israeli venture capital crowdfunding platform OurCrowd.
Yet, appreciation for the deposit guarantees, which will allow thousands of tech businesses to continue paying their employees and other obligations, was mingled with moments of reflection among entrepreneurs and venture capital partners shaken by Silicon Valley Bank’s failure.
The crisis “made every company examine their banking arrangements and the organizations with which they work,” said Rajeeb Dey, CEO of Learnerbly, a workplace learning platform based in London.
“Every bank is glad to receive money from a startup,” Lee remarked.
Nonetheless, there are concerns that it will be more difficult to finance the inherently risky ideas that underpin tech startups, which have become a specialty of Silicon Valley Bank since its founding in 1983 over a poker game, just as the personal computer and faster microprocessors unleashed more innovation.
Silicon Valley swiftly established itself as the “go-to” location for venture capitalists seeking financial partners who were more open to innovative business concepts than its larger, more established rivals who still lacked a basic understanding of technology.
“They understood startups and venture finance,” said Leah Ellis, CEO and co-founder of Sublime Systems, a business in Somerville, Massachusetts that is commercializing a low-carbon cement manufacturing method.
