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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.
