Global Impact of Silicon Valley Bank Collapse: UK Treasury Acknowledges Need for Intervention
The ramifications of the downfall of Silicon Valley Bank are far-reaching.[0] The fallout from the collapse is beginning to spread around the world, with the company’s UK unit expected to be declared insolvent and no longer taking new customers. Startup founders are panicking about accessing money and paying employees, prompting the leaders of roughly 180 tech companies to write a letter to UK Chancellor Jeremy Hunt calling for intervention.[1]
SVB had branches in Canada, China, Denmark, Germany, India, Israel and Sweden, too, leading founders to warn that the bank’s failure could wipe out startups around the world without government intervention.[2] SVB’s joint venture in China, SPD Silicon Valley Bank Co., was attempting to calm local clients by reminding them that operations have been independent and stable.[3]
The UK Treasury has started canvassing startups to get an idea of how much they have on deposit and their access to banking facilities at SVB and beyond.[4] Hunt spoke with the governor of the Bank of England about the situation on Saturday morning, and the economic secretary to the Treasury was due to hold a roundtable with affected firms later in the day.[4]
In response to the crisis, Uncapped, a financial tech startup that lends to other startups, is launching an emergency funding program to help companies meet payroll and other obligations, as well as longer-term bridge loans to help with working capital.[2] UK tech startup association Coadec has commented on Twitter that “panic” is setting in as it is clear SVB’s collapse “could have a significant impact on the UK’s tech startup ecosystem” and that they have been in engaging with “Treasury and No. 10 about the potential impact” and “work has been going on overnight on policy options.”[2]
In Canada, SVB Financial Group’s unit reported C$435 ($314 million) in secured loans last year, double the C$212 million a year earlier.[1] Toronto-based advertising-tech firm AcuityAds Holdings Inc. revealed that it had $55 million in deposits at SVB, amounting to more than 90% of its cash.[1]
The UK Treasury has acknowledged the need for intervention, stating that “tech sector companies are often not cashflow positive as they grow, and that they rely on cash on deposits to cover their day to day costs.[5]
0. “SVB Fallout News: Spreading Problems Around the World – Bloomberg” Bloomberg, 11 Mar. 2023, https://www.bloomberg.com/news/articles/2023-03-11/svb-fallout-spreads-around-the-world-as-uk-firms-plea-for-help
1. “From Santa Clara to Shoreditch, SVB Failure Spreads Around World” Yahoo News, 11 Mar. 2023, https://news.yahoo.com/svb-fallout-spreads-around-world-154331383.html
2. “From Santa Clara to Shoreditch, SVB Failure Spreads Around World” Financial Post, 11 Mar. 2023, https://financialpost.com/pmn/business-pmn/svb-fallout-spreads-around-the-world-as-uk-firms-plea-for-help
3. “SVB fallout spreads around the world as UK firms plea for help” The Boston Globe, 11 Mar. 2023, https://www.bostonglobe.com/2023/03/11/business/svb-fallout-spreads-around-world-uk-firms-plea-help
4. “Silicon Valley Bank fallout spreads around the world as UK firms plead for help” The Economic Times, 11 Mar. 2023, https://m.economictimes.com/tech/startups/svb-fallout-spreads-around-the-world-as-uk-firms-plead-for-help/articleshow/98570248.cms
5. “Government to meet tech firms following collapse of Silicon Valley Bank UK” The Guardian, 11 Mar. 2023, https://www.theguardian.com/business/2023/mar/11/government-to-meet-tech-firms-following-collapse-of-silicon-valley-bank-uk
