By Simon Woodhead
As you may, or may not be aware, Silicon Valley Bank (SVB), a long-standing bank to the global technology sector has just suffered a bank run, much like those seen in the crisis of 2008. Few banks have liquidity to survive such a run. The FDIC stepped in to administer the bank on Friday and the outcome remains uncertain. At best, the short-term issues will be overcome and the bank will be saved along with 100% of customer assets; at worst depositors above guaranteed levels will lose some or all funds.
What’s this got to do with telecoms? Quite a lot!
Simwood does not bank with SVB. We do not yet know the contagion that may spread to other financial entities we do use, but at present believe we are unaffected directly. We will update you if this changes.
However, we know a number of VC-funded Simwood customers do bank with SVB and may therefore face a liquidity crisis subject to what happens next week and the diversity of their banking. Few businesses could sustain its primary bank account being locked or lost and this poses a real issue to the technology sector which leans more heavily on SVB than others. Which bank a customer uses isn’t something that we’d ask or would normally be shared with us, but we are aware of a few who use SVB.
Whilst this could potentially be resolved come Monday, and hopefully will be, we strongly encourage those customers who are affected to contact us as soon as possible. We expect we can work with those who contact us early to overcome any issues but helping a few looks very different to helping many and in any event, we can’t help those we don’t know about.
Good luck to those affected!
