NYT TECHNOLOGY: Silicon Valley Bank’s Collapse Causes Start-Up Chaos
By Erin Griffith
Section: Technology
Source: New York Times
Published Date: March 10, 2023 at 02:00AM
On Thursday, after reading about financial instability at the bank, she rushed to move FarmboxRx’s money into two other bank accounts. Her wire transfers didn’t go through. And on Friday, Silicon Valley Bank collapsed, tying up cash totaling eight figures for her company, which delivers food to Medicare and Medicaid participants.
“None of my reps will call me back,” Ms. Tyrner said. “It’s the worst 24 hours of my life.”
Her despair was part of the fallout across the start-up ecosystem from the failure of Silicon Valley Bank. Entrepreneurs raced to get loans to make payroll because their money was frozen at the bank. Investors doled out and asked for advice in memos and on emergency conference calls. Lines formed outside the bank’s branches. And many in the tech industry were glued to Twitter, where the collapse of a linchpin financial partner played out in real time.
The implosion rattled a start-up industry already on edge. Hurt by rising interest rates and an economic slowdown over the past year, start-up funding — which had been supercharged by low interest rates for years — has shriveled, resulting in mass layoffs at many young companies, cost-cutting and slashed valuations. Investments in U.S. start-ups dropped 31 percent last year to $238 billion, according to PitchBook.
By Erin Griffith
Section: Technology
Source: New York Times
Published Date: March 10, 2023 at 02:00AM
Young companies raced to get their money out of the bank, which was central to the start-up industry. Some said they could not make payroll.
Ashley Tyrner opened an account with Silicon Valley Bank for her company, FarmboxRx, two years ago. She was setting out to raise venture capital and knew the bank was a go-to for the start-up industry.On Thursday, after reading about financial instability at the bank, she rushed to move FarmboxRx’s money into two other bank accounts. Her wire transfers didn’t go through. And on Friday, Silicon Valley Bank collapsed, tying up cash totaling eight figures for her company, which delivers food to Medicare and Medicaid participants.
“None of my reps will call me back,” Ms. Tyrner said. “It’s the worst 24 hours of my life.”
Her despair was part of the fallout across the start-up ecosystem from the failure of Silicon Valley Bank. Entrepreneurs raced to get loans to make payroll because their money was frozen at the bank. Investors doled out and asked for advice in memos and on emergency conference calls. Lines formed outside the bank’s branches. And many in the tech industry were glued to Twitter, where the collapse of a linchpin financial partner played out in real time.
The implosion rattled a start-up industry already on edge. Hurt by rising interest rates and an economic slowdown over the past year, start-up funding — which had been supercharged by low interest rates for years — has shriveled, resulting in mass layoffs at many young companies, cost-cutting and slashed valuations. Investments in U.S. start-ups dropped 31 percent last year to $238 billion, according to PitchBook.
Read More at: https://www.nytimes.com/2023/03/10/technology/silicon-valley-bank-fallout.html
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