Silicon Valley Bank’s demise disrupts the disruptors in tech

Silicon Valley Bank’s collapse rattled the technology industry that had been the bank’s backbone, leaving shell-shocked entrepreneurs thankful for the government reprieve that saved their money while they mourned the loss of a place that served as a chummy club of innovation. “They were the gold standard, it almost seemed weird if you were in tech and didn’t have a Silicon Valley Bank account,” Stefan Kalb, CEO of Seattle startup Shelf Engine, said during a Monday interview as he started the process of transferring millions of dollars to other banks. The Biden administration’s move guaranteeing all Silicon Valley Bank’s deposits above the insured limit of $250,000 per account resulted in a “palpable sigh of relief” in Israel, where its booming tech sector is “connected with an umbilical cord to Silicon Valley,” said Jon Medved, founder of the Israeli venture capital crowdfunding platform OurCrowd. Bob Ackerman, founder and managing director of venture funder AllegisCyber Capital, likened last week’s flood of withdrawal demands from Silicon Valley Bank to a self-inflicted wound by “a circular firing squad” intent on “shooting your best friend.” Many of Silicon Valley Bank’s roughly 8,500 employees now find themselves hanging in limbo, too, even though government regulators now overseeing the operations have told them they will be offered jobs at 1.5 times their salaries for 45 days, said Rob McMillan, who had worked there for 32 years. In an essay that he posted on his LinkedIn page, prominent venture capitalist Michael Moritz compared Silicon Valley Bank to a “cherished local market where people behind the counters know the names of their customers, have a ready smile but still charge the going price when they sell a cut of meat.” Silicon Valley Bank is fading away at a time when startups were already having a tougher go at raising money, with a downturn in technology stock values and a steady rise in interest rates causing venture capitalists to retrench.