The Federal Deposit Insurance Corporation (FDIC) created a National Bank of Santa Clara to hold deposits and other assets of the failed Silicon Valley Bank (SVB), but the abrupt closing is impacting tech firms even with immediate tasks like ensuring employees get paid.
Wedbush Analyst Dan Ives called it a “nightmare situation.”
“This will have a massive ripple impact across the tech ecosystem and Silicon Valley private company artery. SVB is a foundational piece of the tech startup community and will have a constrained impact on funding for tech startups going forward,” Ives said in an email.
Silicon Valley Bank’s clients included brands such as Shopify, ZipRecruiter, Pinterest and venture capital firm Andreessen Horowitz, among others.
Even businesses that aren’t clients are getting impacted by the closure, especially with the most immediate impact on delaying payrolls.
Parker Conrad, CEO of Rippling, a payroll processor that used Silicon Valley Bank, said there would be payment delays of pay runs initiated earlier this week. The company is focused on “getting these employees paid as quickly as possible,” he said in a Twitter thread. Going forward, Rippling will use JPMorgan Chase & Co.
Silicon Valley Bank was hit hard by the series of interest rate hikes by the Federal Reserve. It’s the latest way the rising interest rates have hit the tech sector — following the mass layoffs at tech firms including giants such as Meta, Amazon and Google.
Read more on the bank’s collapse in our full report at TheHill.com.
