Silicon Valley Bank, the lender to the artificial intelligence start-ups and fintech giants of the San Francisco Bay Area, fell victim to the age-old enemy of a bank run last week.
SVB boss Greg Becker had a call on Thursday when he begged tech industry bosses to stay calm as issues at the bank developed.
“My ask is to stay calm because that’s what is important, we have been long-term supporters of you – the last thing we need you to do is panic.”
This didn’t work. The tech industry moved en masse to try and withdraw their funds. Yesterday afternoon US regulators seized control of the California lender, making it the biggest banking collapse since the 2008 worldwide economic crisis. Shares had already been suspended, a day after falling 60% as venture capitalists told start-ups to pull their deposits immediately.
Contagion fears have cascaded around the world now, with shares in Wall Street giants JP Morgan, Citigroup, and Bank of America falling hard, and fears spread to European lenders, with HSBC, Barclays, and Standard Chartered falling during Friday trading. SVB was the 16th largest bank
Why does this matter to our Outposters? Other than that some of you might lose money. As silicon valley’s bank of choice, some of those tech companies are streamers. Already the streaming media player maker Roku has had to issue a market notification.
Around 26% of Roku’s cash and cash equivalents were held as deposits in Silicon Valley Bank. That is nearly half a billion dollars! It is uninsured. Roku has had to assure investors and markets that it has enough cash to meet its working capital requirements and contractual obligations.
A quarter of their money. Gone. They won’t be the last media or entertainment adjacent company impacted by this. Also, many employees of tech and media in that area will have lost ready cash, savings, and investments. Brace!
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