Silicon Valley Bank (SVB) collapses: A series of startups are on the verge of closing

The collapse of Silicon Valley Bank (SVB) has pushed startups - customers of SVB to the brink of closing.

Silicon Valley Bank (SVB) is the 16th largest bank in the US, Silicon and is considered a big name in the industry, having an irreplaceable position for startups and venture capital.

With a history of 40 years, the bank has expanded to become a key financial institution for startups, partnering with more than half of US venture capital firms along with a wide range of startups. technology and healthcare industries.

SVB's services range from deposits, funding for technology businesses, venture capital, lending and even currency risk management.

Even on its homepage, SVB introduced itself that: “There are many ways to call our name. "Banking" is just one of them.

Therefore, the sudden collapse of Silicon Valley bank created a shock to the technology world, especially startups - Silicon Valley's main customers.

In particular, many founders of startups with deposits in the bank wonder what will happen to their funds. For some companies, this deposit is money to pay employees.

And the question is, will they be able to continue paying salaries or should the company be dissolved?

It is known that after the collapse of SVB, the bank's assets were taken over by the United States Federal Deposit Insurance Company (FDIC) as a depository unit.

The FDIC announced that people with bank deposits of $250,000 or less will be able to access those funds no later than March 13, 2023.

So the question for startups that have deposited money in SVB is what happens to their excess $250,000.

According to a source from Fortune, a few hours after SVB's collapse, the founder of a startup that once made a transaction with this bank said: "Our minds are spinning. We don't know for sure what will happen next."

Another founder also texted Fortune: “I think the whole banking system is paralyzed.” Startup leaders insist their focus right now is on how to get cash and pay their employees.

According to Fortune, a representative of a venture capital fund shared that: "I don't know what will happen to the money that startups have deposited at the bank if it exceeds $ 250,000 (the amount is insured). ) Will they be "locked"?

Before the collapse, SVB had total assets worth about $209 billion and $175.4 billion in deposits.

It is not clear exactly how many deposits were uninsured by the time this bank was closed, but according to the annual report file, as of December 2022, SVB has more than 151 billion USD in deposits. not covered by insurance, equivalent to more than 90%.

According to the FDIC, by March 13, 2023, those with insured deposits at SVB will have full access to those funds. Uninsured depositors will receive a prepayment.

For the remaining cases, they will receive a certificate confirming themselves as the beneficiary after the FDIC liquidates SVB's assets.

Still, Silicon Valley Bank's client startups can't be sure what will happen to their uninsured funds. Moreover, they need this money in a very short time to pay employees in the next pay period.

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