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Today, America’s 15th largest bank, Silicon Valley Bank has failed. Y Combinator is an innovation program that has launched some of the largest startups in the world including Airbnb, Coinbase, DoorDash, Dropbox and many, more. Since 2005, YC has funded over 4,000 startups. This equates to more than 1,000 companies, which would employ tens of thousands of employees.

Silicon Valley Bank (SVB) is a commercial bank that primarily serves technology and life science companies, as well as venture capitalists and private equity firms. Some of the customers of Silicon Valley Bank include:

  1. Technology startups: SVB provides banking and financial services to many technology startups, including Airbnb, Uber, and LinkedIn.
  2. Life science companies: SVB also serves life science companies, such as Illumina and Intuitive Surgical, that are involved in biotechnology, pharmaceuticals, medical devices, and healthcare.
  3. Venture capitalists and private equity firms: SVB works with many venture capital and private equity firms, such as Sequoia Capital and Accel Partners, providing them with banking and financial services.
  4. Emerging managers: SVB supports emerging managers in the venture capital and private equity space with financing, banking, and advisory services.
  5. Wine and beverage industry: SVB also serves the wine and beverage industry, including wineries, breweries, and distilleries, with banking and financial services tailored to their unique needs.
  6. Corporate and investment banking clients: SVB provides corporate and investment banking services to a range of clients, including mid-market and large-cap companies, and institutional investors.

The CEO of Y Combinator, Garry Tan posted this morning saying this bank’s failure is an ‘extinction level event’. While that sounds dramatic, the follow-up tweet demonstrates the seriousness of this failure.

Tan says 30% of YC companies are exposed through the Silicon Valley Bank failure. With those funds unavailable, it will mean they won’t be able to make payroll, that is pay their employees in as little as 30 days.

American Banks are backed to protect customer depositors, but that limit stops at 250k and the process to get that funding will likely take weeks or months. Even the most understanding employees are unlikely to work for your business very long if they’re not getting paid.

The Federal Deposit Insurance Corporation (FDIC) has now taken charge of the bank.

The publicly traded bank, SVB Financial Group (SIVB) is down 62.76% today on the news.

This problem starts today for startups, if employees know their company uses SVB, they are likely to be looking for alternative employment if they suspect they are on a path to not getting paid in the near future.

Many are calling for the US Government to step in and help.

With SVB’s future in doubt, it’s pretty wild to look back on recent events.


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#Combinator #CEO #SVB #collapse #leave #graduates #unable #meet #payroll #days #techAU

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