Silicon Valley Bank’s stunning collapse has led to the freezing of tens of billions of dollars stored there by startups and their private equity backers, raising fears of a wider tech sector fallout. | AFP
The company previously boasted that “nearly half” of technology and life science companies that had US funding banked with them, leading many to worry about the possible ripple effects of its collapse.But according to SVB’s latest annual report, 96 percent of its total $173 billion in deposits was uninsured.
He warned that “years of US innovation” are on the line, as an entire “generation of American startups” could be destroyed in a month or two.Activist investor Bill Ackman raised a similar alarm on Twitter, saying that SVB’s collapse “could destroy an important long-term driver of the economy.” Champ Bennett, cofounder of the video platform Capsule, revealed on Friday that the $5 million raised in mid-February during the company’s first seed funding round was housed at SVB and now inaccessible.Bennett added that an intervention should not be viewed as “bailing out ‘The 1’ or ‘Big Tech’,” pointing to the “thousands of the most hardworking, talented individuals” at impacted companies who are currently “struggling.
Like others, Bennett says he is also concerned about the fate of other banks favored by the tech industry, including California’s First Republic, whose stock price fell 30 percent in two days.
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