Silicon Valley Bank collapse fallout spreads around world
The fallout from the collapse of Silicon Valley Bank is beginning to spread around the world.
Startup founders in California’s Bay Area are panicking about access to money and paying employees. Fears of contagion have reached Canada, where the bank’s loan book has doubled in the past year. SVB’s unit in the U.K. is set to be declared insolvent, has already ceased trading and is no longer taking new customers. On Saturday, the leaders of roughly 180 tech companies sent a letter calling on U.K. Chancellor Jeremy Hunt to intervene.
“The loss of deposits has the potential to cripple the sector and set the ecosystem back 20 years,” they said in the letter seen by Bloomberg. “Many businesses will be sent into involuntary liquidation overnight.”
This is just the beginning. SVB had branches in China, Denmark, Germany, India, Israel and Sweden, too. Founders are warning that the bank’s failure could wipe out startups around the world without government intervention. SVB’s joint venture in China, SPD Silicon Valley Bank Co., was seeking to calm local clients overnight by reminding them that operations have been independent and stable.
“This crisis will start on Monday and so we call on you to prevent it now,” U.K. startup founders and chief executive officers said in the letter to Hunt. The companies listed in the letter include Uncapped, Apian, Pockit and Pivotal Earth.
Hunt spoke with the governor of the Bank of England about the situation on Saturday morning, and the economic secretary to the Treasury was holding a roundtable with affected firms later in the day, the Treasury said.
Underscoring the challenge governments face in getting a handle of the full extent of the fallout: The U.K. Treasury has begun canvassing startups, asking how much they have on deposit, their approximate cash burn and their access to banking facilities at SVB and beyond, two people familiar with the matter said, asking not to be identified because the information isn’t public. Treasury declined to comment on the survey.
Founders were anxiously awaiting the outcome of the roundtable and any information about how their deposits at the bank would be handle. Toby Mather, CEO of education software startup Lingumi, has 85% of his company’s cash in SVB. He tried to transfer his accounts from SVB using an iPhone app, but as of Saturday evening, he wasn’t sure whether that worked. “This is life or death for us,” he said. “These things seemed so mundane before.”
Jack O’Meara, founder of the London genomics startup Ochre Bio, spent the weekend trying, unsuccessfully, to move deposits out of SVB. “If there is no intervention,” he said, “it could really wipe out a generation of entrepreneurial companies.”
SVB customers in California, many of them startup founders, stood outside of the bank’s branch on Silicon Valley’s famed Sand Hill Road in the cold and rain on Friday, knocking on the locked glass doors and trying to get representatives of the Federal Deposit Insurance Corp., to answer their questions.
Another customer remarked that he should have brought a bottle of whiskey to pass around as they waited. In trying to get more information from an FDIC representative, he said, “Put yourself in our shoes.” The representative apologized before closing the glass door once again.
SARASOTA
Residents are complaining about burning eyes and breathing problems. Dead fish have washed up on beaches. A beachside festival has been canceled, even though it wasn’t scheduled for another month.
Florida’s southwest coast experienced a flare-up of the toxic red tide algae this week, setting off concerns that it could continue to stick around for a while. The current bloom started in October.
The annual BeachFest in Indian Rocks Beach, Florida, sponsored by a homeowners’ association, was canceled after it determined, with help from the city and the Pinellas County Health Department, that red tide likely would continue through the middle of next month when the festival was scheduled.
”Red Tide is currently present on the beach and is forecasted to remain in the area in the weeks to come,” the Indian Rocks Beach Homeowners Association said in a letter to the public. “It is unfortunate that it had to be canceled but it is the best decision in the interest of public health.”
Nearly two tons of debris, mainly dead fish, were cleared from Pinellas County beaches and brought to the landfill, county spokesperson Tony Fabrizio told the Tampa Bay Times. About 1,000 pounds of fish have been cleared from beaches in St. Pete Beach since the start of the month, Mandy Edmunds, a parks supervisor with the city, told the newspaper.
Red tide, a toxic algae bloom that occurs naturally in the Gulf of Mexico, is worsened by the presence of nutrients such as nitrogen in the water. The Florida Fish and Wildlife Conservation Commission warns people to not swim in or around red tide waters over the possibility of skin irritation, rashes and burning and sore eyes. People with asthma or lung disease should avoid beaches affected by the toxic algae.
The Florida Fish and Wildlife Conservation Commission on Friday reported that it had found red tide in 157 samples along Florida’s Gulf Coast, with the strongest concentrations along Pinellas and Sarasota counties.