And not a friend, and not a bank, but just like that – Finance – Kommersant

Tech startups that have relied on near-exclusive lending and service from Silicon Valley Bank for years are now scrambling to figure out where to get money quickly and easily and where to store it. And most likely, both will become much less accessible for young companies after the collapse of SVB.

Silicon Valley Bank, as its name suggests, lends to young Silicon Valley companies and was the largest bank of its type in the United States. The bank regularly provided its services to local entrepreneurs for 40 years, until March 10 announced about bankruptcy. The funds stored in the collapsed bank will be able to be returned to its customers without any problems – the benefit of this taken care of Treasury, the Fed, and the Federal Deposit Insurance Corporation. Much more difficult, writes Financial Timesstartups will find an equivalent replacement for SVB.

The US authorities are doing their best to keep the SVB and are looking for a potential buyer. Its UK division has already agreed to buy out HSBC, albeit for a symbolic £1. Finding a buyer for the American (and main) division of SVB has not yet been possible. Startups, according to the FT, decided not to wait for the situation to be resolved and intend to transfer the funds stored on SVB accounts to other banks. However, the newspaper notes, it is at this stage that the first serious problem arises for young technology companies.

Immediately after the bankruptcy of SVB, many clients of regional banks in the United States rushed transfer your savings to the largest banks in the country, such as Bank of America, Citigroup and JPMorgan Chase. And, as venture investors told the newspaper, many startups faced refusals from large banks.

The fact is that for traditional and large banks, technology startups are not the most desirable customers. Such banks are not ready to provide loans to companies that have no or little to no revenue or assets. Unlike SVB.

Its business model was entirely startup-focused, lent by venture capitalists whom the bank knew how to convince that the next young company deserved a chance and funding. SVB has been responsive to the needs of startups, such as helping them build the financial infrastructure they need to run their businesses, providing an unusually high level of personal service to relatively small clients. “There was always someone you could talk to, no matter how small [стартап]Robin Klein, a venture capitalist at LocalGlobe, told the FT. “This is very different from the big banks.”

The second major problem for young companies will be the tighter regulation of the banking sector, which will inevitably follow the collapse of SVB and Signature Bank. About him the President of the United States declared at the same time, when he was trying to calm down American, and at the same time foreign, investors, who were talking about a possible collapse of the US banking system. By data FT, the Fed is preparing to tighten control over regional banks. In particular, the authorities intend to review the requirements for capital and liquidity of banks, especially those whose assets range from $100 billion to $250 billion. In addition, regulators are ready to tighten their own stress tests, which are carried out annually and assess the ability of creditors to withstand adverse economic and financial scenarios. .

SVB belonged to this category, the volume of assets of which at the end of 2022 was $212 billion and which, as a result of numerous relaxations in the field of regulation and control over the banking sector, was out of the sight of US regulators. Now the American authorities are trying to correct this omission.

For start-ups, this means that they will not be able to get funding from other regional banks as easily as it is from SVB.

All this, venture investors believe, can lead to a global redistribution of the technology sector. Large banks will serve predominantly equally large technology corporations. And start-ups will obviously have to seek funding either from HSBC, which bought out the UK division of SVB, or from online banks ready to issue a loan almost instantly.

Kirill Sarkhanyants