The Silicon Valley Bank Collapsed on Global Tech: How the Collapse of the Silicon Valley Bank Affected Global Tech

Shortly after Californian startups started pulling money out of trouble Bank of Silicon Valleyentrepreneurs in other parts of the world woke up to the news.

“About 90% of our cash was in SVB,” said Sam Franklin, 28, a London-based chief executive whose Otta recruiting firm specializes in tech talent. He gave up weekend “administrative life” to figure out how to pay his employees at the end of the month.

In Hong Kong, Florian Simmendinger, co-founder and CEO of Hong Kong-based wearables company Soundbrenner, missed the start of the California panic over SVB Financial Group last week but caught on quickly.

“I’m like what? Are you kidding? Like my bank? He said. “We were no longer able to log into our account during normal business hours.”

While the global impact of the collapse of Silicon Valley Bank is just beginning to emerge, one thing is clear: technology startups, however far apart, even intertwined. Many depend on one medium-sized bank for their daily operations.

Following in the footsteps of their California counterparts, start-ups in Europe and Asia have flocked to a bank that was ranked 16th in the US last year, a tech-sounding bank that offered them specialized financial services.

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The founders of the USA are cautious Quincy Lee, founder of Seattle-based electric vehicle charging startup Electra Era, attempted to transfer millions of dollars from a Silicon Valley bank Thursday afternoon as warning signs escalated.

The site was unavailable due to overloaded traffic. The customer service agent told him over the phone that there might be a delay because so many people are trying to withdraw money. By Monday afternoon, he managed to get his money and was looking for an alternative bank.

After intense discussions over the weekend about the future of SVB, US regulators unveiled an emergency funding plan that gave the bank’s customers access to all their deposits.

In the UK, Chancellor of the Exchequer Jeremy Hunt said the government and the Bank of England facilitated the private sale of the UK division of SVB HSBCwhich would protect deposits without the backing of taxpayers.

European Union officials also assured consumers that the bank has a “very limited presence” in the bloc. And Christoph Strezing, managing director of the German Startup Association, expressed cautious optimism that domestic companies would get off lightly.

However, European stocks tumbled on banking sector concerns, and even startups that didn’t work with SVB struggled.

“It’s hard to see just how interconnected SVB is with the startup ecosystem,” said Rachel Crook, founder and CEO of London-based healthcare startup Lifted. Over the weekend, she reassured investors and ensured that important service providers were not hit by hurdles after executives raised concerns that a key financial partner may have SVB-related money.

Oleksandr Volodarsky, CEO of Lemon.io, a Ukrainian startup that works with SVB in the US, told Reuters he began discussing the collapse with other entrepreneurs in the region on Thursday.

“We initiated a bank transfer on Friday morning, but nothing has happened so far,” he said. “We are lucky because just two days ago we made payments to developers and engineers.”

Chinese startups transfer money

SVB’s Shanghai-based joint venture, SPD Silicon Valley Bank (SSVB), said it has a strong corporate structure and an independent balance sheet. SSVB is China’s first technology and innovation bank, and the first Sino-US joint bank.

Because SVB was one of the few banks that made it easy for startups to open bank accounts for dollar funding, it has been the dominant foreign bank for early-stage companies in China, consultants and companies say.

But many Chinese startups and fund managers are working to get their money out of SVB’s US arm.

One lawyer for a Chinese venture capital firm said that almost all of his portfolio companies’ operating cash, as well as his own operating cash, was held in SVB, and spent the weekend strategizing on alternatives.

After a weekend roller coaster, Otta CEO Franklin said his company would continue banking with SVB UK and open accounts with other banks.

“The big learning curve for a lot of us in this industry has been, ‘If you have a lot of money, you have to distribute it.’