The technology industry is struggling to make sense of and account for potential repercussions of Silicon Valley Bank's sudden collapse.
financial institution for Silicon Valley tech startups for the past 40 years. The collapse of SVB represents the biggest banking failure since the 2008 global economic crises.Numerous venture investors and technology executives expressed shock to CNBC, some comparing SVB's current debacle to the Lehman Brothers, which filed for bankruptcy in 2008. All of the investors and requested anonymity discussing matters that might affect their firms and employees.
Another venture capitalist said that a representative from Silicon Valley Bank called their firm on Thursday to assuage their fears, but that the firm's CFO "didn't feel that it was reassuring, to say the least." One AI startup executive noted that the company's chief financial officer was quick to handle the situation, and it had enough money to pay employees on time. Still, the collapse of SVB left a poor taste in the executive's mouth, who said that the bank's collapse feels like "unnecessary hysteria."Many venture capitalists echoed the startup CEO's sentiment that the SVB collapse felt like a self-fulfilling prophecy created by unnecessary panic.
One startup founder told CNBC that "everyone is scrambling." He said he has talked to more than 30 other founders, and that both big and small companies are being impacted. In the case that it doesn't, the company is planning to wire employees who need immediate spot coverage the funds directly, according to an internal memo viewed by CNBC.
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