A “bank run” in due form. On Wednesday March 8, Silicon Valley Bank (SVB), the 16th largest commercial bank in the United States, in financial difficulties, announced a massive sale of securities causing its market value to fall. The following day, start-ups – main clients of the California-based bank at the heart of the tech ecosystem – made withdrawals of up to $42 billion. On Friday, Silicon Valley Bank declares bankruptcy. Among the victims: mostly American companies, such as game publisher Roblox ($150 million in deposits), video streaming challenger Roku ($487 million) and other firms specializing in cryptocurrencies.
But also some French women, tempted by this reputedly stable establishment, which was going to celebrate its 40th anniversary in the fall. WeWard, which specializes in footstep monetization – 20 million claimed users worldwide – is one of them. “SVB was a start-up bank friendly, in which you could open a bank account remotely without necessarily being American or even being present on site. It was therefore very simple to manage, completely digital. Ideal when we started to manage a little activity in the United States, which was our case”, explains Yves Benchimol, its CEO.
The entrepreneur had invested more than $250,000 (the guaranteed maximum, initially) about a month ago. He very quickly followed the movement of the “bank run”, like many, just before the weekend. “We ordered withdrawal transfers before the platform was closed but they still haven’t arrived.”
Financial help
The news, which fell on Sunday, however relieved him: the American government covers all the funds. “Depositors will have access to all their money starting Monday, March 13,” said the Treasury Department, the Federal Reserve Board of Governors and the United States Federal Deposit Insurance Corporation. “We are reassured. Even if the losses would not have had an immediate effect on us (the company has other accounts, particularly in France), it was still part of our cash.” Yves Benchimol now retains the momentum of solidarity that crossed the movement on Friday, after the bankruptcy, then on Saturday, with regard to those whose payment of wages (sometimes weekly, in the United States) no longer held to a thread. “There was immediately great solidarity between tech players, with contact exchanges, webinars almost every hour to inform about the situation, legal advice, and above all proposals from companies in order to financially help those most at risk,” he said.
Several examples of these exchanges are still visible today on LinkedIn. “Given the confusion surrounding supplier payments, we pay your suppliers on your behalf and provide flexible payment terms of up to 12 months to support your working capital within 24 hours. We have significant capital to support the ‘ecosystem right now and can support up to $500,000 for operational expenses – feel free to message me directly if I can help in any way,” writes for example Philip Kelvin, of the Slice start-up. The asset manager Liquidity Group has meanwhile indicated that it is able to help start-ups through loans, up to 3 billion dollars. According to a petition launched by the famous incubator Y-Combinator, some 100,000 jobs were immediately at risk. “If the Government, Treasury and Federal Reserve had not intervened today, we would have had a 1930s bank run that would continue into the first hour Monday, causing enormous economic damage and hardship to millions. of people,” said American investor and philanthropist Bill Ackman, founder of Pershing Square Capital.
Some, however, regret that this solidarity did not manifest itself sooner. “SVB has been an integral part of the venture capital and tech start-up community for decades. When other big banks weren’t taking phone calls from tech start-ups, SVB did and was seen as a A key artery for Silicon Valley’s tech ecosystem, it has played a vital role in the rise of successful tech start-ups, especially after the dotcom bubble,” said tech analyst Dan Ives. And despite everything, the loss of confidence was extremely rapid. Less than 48 hours. In small exchange groups on WhatsApp, some entrepreneurs still fear contagion and prefer to remain discreet so as not to frighten their customers. Behind the scenes, strategies are being redefined. This is especially the case in crypto. “For fear of being exposed indirectly, all my clients have for the moment converted their stablecoins (so-called stable cryptocurrencies) into fiat currency”, tells L’Express Izzat-Begum B. Rajan, head of the consulting firm Imani Partners. . A sign that, far from happy end desired by the White House, the episode is in fact likely to leave traces in some.