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Silicon Valley Bank’s failure on Friday raises concerns over the potential impacts on the climate technology industry, where SVB was heavily involved.
„They went out of their way to attract entrepreneurs, to attract companies in the technology industry. They were one of the first banks to have a dedicated, clean energy sustainable finance department,“ Mona Dajani, Global Head of Energy & Infrastructure at the law firm Shearman and Sterling, . „They consciously developed this practice, and they were a well-known source — that’s where you could go because they were willing to lend to higher-risk, new companies.“
Silicon Valley Bank provided financing for over 1,550 clients working on climate technology and sustainability, according to its website. As of December 2021, SVB had committed $3.2 billion to such projects. The bank also claimed to have led or participated in 62% of community solar financings, as of last March.
Dajani said many of her clients banked with SVB and that „despite having their money restored“ there is a feeling of skittishness after the failure of the bank.
Long-term, she said the failure of SVB could mean some smaller start-up climate technology companies could be cut off from credit lines if no other bank or entity takes on the SVB portfolio.
While larger „clean tech“ companies will likely take their business to larger banks, Dajani said smaller companies and start-ups may have a harder time meeting what will likely be stricter standards for loans, possibly leading to a „slight chilling effect“ in the industry.
Kiran Bhatraju, founder and CEO of Arcadia, a tech company focused on combating climate change, expressed concern over the downfall of SVB on Twitter Saturday, writing, „What’s missing from the narrative is SVB is a climate bank.
