SVB closure affects hundreds of startups and VCs

The closure of Silicon Valley Bank has affected startups and venture capital firms.

Hundreds of such firms did their banking and kept billions of dollars at the bank, which went into receivership Federal Deposit Insurance Corporation (FDIC) Friday (March 10), The information reported Friday.

This has meant that the bank’s customers cannot log into their accounts, struggle to pay employees and access funds, and wonder if they can get a loan.

They also wonder when and if they can get their money. While the FDIC said insured deposits would be available no later than Monday, most of the funds at Silicon Valley Bank — which had deep ties to the technology industry — are uninsured, the report said.

Some customers started bank transfers on Thursday — the day before Silicon Valley Bank’s shutdown — but did not know as of Friday whether those transfers would go through, according to the report.

The Information reported that one startup warned employees that they would see “operational hiccups” in the coming weeks, another tried and failed to withdraw $50 million from the bank on Thursday, a third is using T-bills and other securities and still others are. trying to turn their claims on unsecured funds into cash or collateral for loans.

An investment firm that had been receiving money from its limited partners through Silicon Valley Bank has asked them to stop sending capital to its account there, according to the report.

The bank’s collapse may have other long-term effects. One startup said it is worried about future fundraising efforts because so many investors were knocking on Silicon Valley Bank, while another said tech firms might not be able to find another bank as willing as Silicon Valley Bank was to partner with them when they entered into tough times, says the report.

California Institute for Financial Protection and Innovation (DFPI) took possession of the bank and named the FDIC as receiver on Friday, citing its “lack of liquidity and soundness.”

The bank and its parent company SVB Finance Group had been plagued in recent days by customer withdrawals and falling stock prices.

The company has said on its website that it is “the Bank manager in the FinTech industry.”