Silicon Valley Bank’s collapse puts a strain on start-ups

Josh Butler, chief executive of CompScience, a workplace safety analytics start-up, said he was unable to withdraw his company’s money from the bank on Thursday or before the collapse of the bank on Friday. The last day, he said, had been nerve-wracking.

“Everyone from my investors to employees to my own mother is reaching out to ask what’s going on,” Butler said. “The big question is how soon will we be able to access the rest of the funds, how much if any? It’s absolutely scary.

CompScience was suspending spending on marketing, sales, and hiring until it resolved more pressing issues, like payroll. Mr Butler said he had prepared for a big crisis, given the unhappiness and gloom swirling around the industry.

But “did I expect it to be Silicon Valley Bank?” he said. “Never.”

Camp, a start-up selling gifts and experiences for children, added a banner to its website on Friday that read: “OUR BANK JUST CLOSED – SO EVERYTHING IS ON SALE!”

The site was offering 40% off with the promo code “bankrun” alongside a meme that included the words “I never liked the Bay Area” and “how could this happen”. A representative for Camp said the sale was linked to the collapse of Silicon Valley Bank and declined to comment further.

Sheel Mohnot, an investor at Better Tomorrow Ventures, said his venture capital firm advised his start-ups on Thursday to shift money into treasury bills and open other bank accounts as a precaution.

“Once a bank run has started, it’s hard to stop,” he said.

Some of the start-ups Mr Mohnot’s company has invested in chose not to move their money, while others were unable to act in time before the bank failed, he said. declared. Now their biggest concern was doing payroll and then figuring out how to pay their bills, he said.