SVB’S failure casts pall over SXSW
Tech firms affected by bank’s collapse have big presence at festival
Walking through Roku City on Sunday afternoon, you’d hardly know the namesake company was having an unusually stressful weekend.
Sure, the faux metropolis — a several-story re-creation of Roku’s beloved screensaver, set up in the heart of downtown Austin for the city’s tech and culture extravaganza South by Southwest — had its share of problems. A massive robot rampaged through one part of the installation; a kraken’s tentacles rose menacingly from the sea in another.
But nothing served to suggest that Roku, a San Josebased streaming and hardware giant, had just watched millions of dollars potentially disappear into thin air. According to a regulatory filing, the company had $487 million, or about a quarter of its cash, saved in Silicon Valley Bank — the tech-world lending mainstay that failed, spectacularly and unexpectedly, late last week.
Amid fears that a bank run could spread to other financial institutions, federal agencies — including the Treasury Department, the Federal Reserve and the Federal Deposit Insurance Corp. — now say that all of the bank’s clients will be able to get their money back. Still, given that Silicon Valley Bank did lots of business in the tech and media ecosystem — the lifeblood of South by Southwest, or SXSW, a combination film festival, tech expo and cultural summit — the crisis cast a pall over the first few days of the conference.
Attendees shared rumors of startup founders crying in the street after news of the bank’s collapse broke. Even among more put-together attendees, private Slack channels were reportedly awash in commiseration.
‘Freaking out’
Shannon Brownlee, another attendee at the AI meet up, said that, although her communication tech company Valence Vibrations didn’t keep its own money in Silicon Valley Bank, outside investors who had previously expressed interest in her startup have now said they need more time to figure out their finances.
“Our lead investor from the last [funding] round had $30 million in Silicon Valley Bank,” she said. “He’s just scrambling right now trying to figure it out.”
Upon her arrival at the conference Friday morning, Brownlee, 22, almost immediately heard about the crash.
“We arrived, we went to go sit down at a coffee shop, do some work,” Brownlee said. “And as soon as we sat down, it was just like: ‘Oh my God, everyone is freaking out.’ ”
She’s heard of other conference attendees who have it far worse, though. Some tech workers arrived in Austin only to discover that they didn’t have access to company assets anymore, she said; now they’re “just kind of stuck here.”
“People are definitely nervous,” the startup co-founder added, and although the panel lineup seems to have been relatively unaffected, the general tone is decidedly more somber.
A call for calm
There were, indeed, a few oblique references to the news of the week during the convention’ s educationoriented panels. During a talk on the future of AI, Buzzfeed Chief Executive Jonah Peretti quipped that everything these days is driven by virality — even bank runs.
And during a Monday morning chat titled “How D.C. Wants to Mess With Your Startup,” U.S. Chamber of Commerce President Suzanne Clark framed federal regulators’ latest actions to protect depositors as an example of when government can be helpful to tech companies — even as she pushed back in the rest of her talk on what she characterized as federal overreach in the economy.
“It’s an important morning for a lot of us to be quiet,” Clark said. “It’s an important morning to get smarter and to do the homework of really understanding what happened.”