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Stefan Kalb was in the middle of a meeting around 1 p.m. on Thursday when a fellow company executive sent him a panicked Slack message: “Do you know what’s happening at SVB?”
Kalb, the CEO and co-founder of Seattle-based food management startup Shelf Engine, had been following news of a bank run at Silicon Valley Bank, with droves attempting to pull out $42 billion from the bank on Thursday alone on fears that it was teetering on the brink.
The bank was was on firm financial footing on Wednesday. The following day, it was under water.
For Shelf Engine, a 40-person startup founded in 2015 that uses artificial intelligence to help grocery stores reduce food waste, this was a major problem.
Not only did Silicon Valley Bank help the company process checks and payments, but all of the startup’s cash was locked up in the bank.
Kalb sprung into action. He and his team quickly opened an account at JPMorgan Chase and attempted to wire transfer every last penny out of Silicon Valley Bank.
“Unfortunately, our wire was not honored and our money is still at Silicon Valley Bank,” Kalb, 37, said in an interview on Friday. “We woke up this morning hoping the money would be in that JPMorgan bank account, and it was not.”
While he declined to provide the exact amount, he noted that Shelf Engine has raised more than $60 million from investors. “It was a very large sum of money,” he said of the transfer.
It is a nail-biting limbo state that many tech startups deeply entrenched in Silicon Valley Bank are now facing in the wake of the bank’s implosion, the largest American bank failure since the 2008 financial crisis.
For tech startups, which for decades have relied heavily on the bank based in Santa Clara, Calif., it has set off a crisis that could lead to mass layoffs, or hundreds of startups collapsing, according to industry insiders.
“If the government doesn’t step in, I think a whole generation of startups will be wiped off the planet,” Garry Tan, president and CEO of the startup incubator Y Combinator, said in an interview.
