After regulators shut down Silicon Valley Bank on Friday and froze the deposits that are a lifeline for many early-stage technology companies, start-ups in Silicon Valley are struggling to pay their employees and identify alternative sources of funding.
SVB, the 16th largest bank in the US and a central part of the Silicon Valley ecosystem, provided services to nearly half of all venture-backed technology startups and most of their investors.
Worry among start-ups According to the Financial Times, SVB is now in the hands of the Federal Deposit Insurance Corporation (FDIC), leaving depositors worried about dealing with urgent operational issues and the possibility of not being able to access their cash for weeks or months.
Garry Tan, the president of leading start-up accelerator Y Combinator, said in a Twitter post on Friday, “The closure of SVB is a catastrophic event for startups and will set startups and innovation back 10 years or more. All small startups that could be the next Google or Facebook will be extinguished if we can’t find a solution to the problem.”
Garry Tan said, “30% of YC companies working with SVB won’t be able to make payroll within the next 30 days.”