From wealthy founders to Napa vineyard owners, clients were scrambling to secure funds or find out basic information about what would happen to their deposits
The shocking collapse of Silicon Valley Bank rippled across California Friday to industries far beyond the technology community that it played a major role in shaping.
From wealthy founders to Napa vineyard owners, clients were scrambling to secure funds or find out basic information about what would happen to their deposits. Anxious customers formed lines outside branches across the Bay Area and fears grew that some companies will struggle to make payroll next week.
The sudden implosion — the worst bank failure since 2008 — delivered a deep blow to a Silicon Valley ecosystem already struggling with a rapid tech downturn, thousands of layoffs and the lingering economic effects of the Covid-19 pandemic. In a region that exploded over the past decade to generate massive wealth and become an engine of economic growth, the bank had extensive and far-ranging roots.
“The reach into Silicon Valley is at the high level,” said Louis Lehot, a partner at Foley & Lardner, a law firm that advises startups and public companies, who said thousands of bank clients will be affected. “It’s deep and broad at all levels of the ecosystem from big companies to startups to VCs, private equity firms and everything in between.”
The bank, headquartered in Santa Clara, is most known for its financing in the venture capital community. But it also offered mortgages, personal credit lines and other private banking services for people who were serial entrepreneurs. For private equity firms, the bank was an active provider of subscription lines — a type of loan facility the funds can draw on to ease capital calls. And it was a prominent lender to Northern California’s wine industry, with locations in the vineyard areas of Napa and St. Helena.
The company helped forge deep ties in Silicon Valley by regularly sponsoring tech happy hours and events hosted by venture capitalists and startups, where its logo was featured prominently. The bank even sponsored a dinner at the South by Southwest festival in Austin, Texas, on Thursday evening, as the company was in the thick of its turmoil.
The collapse is “pretty seismic,” said Nate Blair, a partner at Palo Alto Wealth Advisors, which has about $400 million under management. “If you’re a meaningful VC player in Silicon Valley, you most likely have a relationship with SVB. Their whole business model was making sure relationships were deep and multifaceted.
