Since last Friday, the Federal Deposit Insurance Corporation took control of Silicon Valley Bank , after California regulators closed it following a failed capital increase of 2.3 billion dollars, which caused its shares to plummet, all Companies are living a nightmare. Now, hundreds of startups face a massive cash crunch if the search for a buyer for Silicon Valley Bank drags into next week. The problem is that, since it is blocked, they cannot access their money. Meanwhile, signs of stress are beginning to appear among SVB's entrepreneurial clients. The venture capital ecosystem echoes the need for startups to pay their salaries. In a tweet , founder Nikita Bier stated that "the number of companies in the growth phase that had their cash in SVB is enormous. Making payroll next week is going to be a show." For his part, Sam Lessin, a partner at Slow Ventures, told CNBC on Friday that a founder he had spoken with planned to cover payroll personally and "figure it out from there.
Even startups that did not operate directly with SVB have been affected by its collapse. One such example is health tech startup Flow Health that used Rippling, which had an account with SVB, as its payroll provider. "We literally have no way to pay employees right now," Flow Health CEO Alex Meshkin told Business Insider . Spain is safe from the Silicon Valley Bank earthquake: why we are far from being swept away by the crisis of the US startup bank Some startups took drastic Asia Phone Number List measures on Friday to try to find liquidity. Popular toy store Camp told its customers it was in trouble after its funds were blocked by the collapse. "All of our cash was in SVB and we're trying to increase our balance in Chase," Camp CEO and co-founder Ben Kaufman told Business Insider via direct message on Twitter. The company announced a 40% markdown in an attempt to raise cash from its customers, telling them to use the code "BANKRUN" at checkout. The ripple effect of SVB's demise will likely be large.
According to its website , as of the end of December, the bank supported nearly half of U.S. venture-backed startups. In a tweet , Garry Tan, CEO of business accelerator Y Combinator, said SVB's bankruptcy was "an extinction event for startups, which will be a setback of 10 years or more for these companies and the innovation ". The fall of SVB affects, directly or indirectly, hundreds of companies. This can be seen in a survey published by The Wall Street Journal , which asked among its nearly 3,000 active companies and revealed that almost 400 had a relationship with SVB and more than 100 feared not being able to meet their payrolls in the next 30 days. unless the situation was resolved quickly. Given these data, Garry Tan has asked citizens to appear in Congress to express his concern. The solution is through purchase At the moment, SVB depositors are assured of $250,000 in cash , which should be available no later than Monday. The rest is not insured.