Several Charlotte startups and tech companies will likely have an easier time managing through the chaos caused by Silicon Valley Bank's collapse thanks to healthy relationships with local financial institutions.
Silicon Valley Bank's failure is the second-biggest in U.S. history, behind only Washington Mutual’s collapse in 2008. Though the seizure is expected to have major repercussions in the tech industry, Dan Roselli, co-founder of RevTech Labs, said startup founders and entrepreneurs in Charlotte won't feel the pain quite as acutely.
"SVB was much less of a prevalent partner here in Charlotte than it was even in Raleigh or Durham, so I think it's having less of an immediate impact," he said. "Is there concern (from startups)? Yes. Panic? No."
Roselli said larger banks have already begun penetrating the startup market, something that isn't always the case in tech. "A lot of startups and tech companies (in Charlotte) have gone to the bigger institutions, the places they see as too big to fail," he said. "It’s not all that common for startups to bank with Silicon Valley because of good relationships already established with the banks here."
Six Charlotte companies — Ekos, Kingsmen Software, NTropy Data, Whip Around, Iotech Systems Corp. and Integrateideas — received a collective $1.6 million in Paycheck Protection Program loans through Silicon Valley Bank in 2020.
Kingsmen Managing Partner Greg Hart said the IT services and consulting company did bank with Silicon Valley for about four years before moving its funds to a local institution last year. Hart said the decision to transfer its money out was made to establish local relationships during the upfit of a new office space in Camp North End.
Hart said he feels fortunate that Kingsmen made the change when it did and was not directly impacted by the bank's failure.
"At many points during our relationship, it could’ve been a pretty painful event for us and could have really affected a small business like us," he said. "I’ve had some discussions with our investment group, who also banked with SVB, and they're in the process of re-establishing a new banking relationship."
Josh McKinney, Ekos chief operating officer, said the startup also banked with Silicon Valley in the past but moved its funds about a year ago. Ekos' business management software is designed to help craft beverage makers streamline inventory, production, sales and accounting.
Customers with deposits at Silicon Valley Bank were able to access their deposits on Monday, the Department of the Treasury, Federal Reserve and FDIC announced Sunday night in a joint statement.
The San Francisco Business Times, a sister paper, reported that Silicon Valley Bank’s main office and all 17 branches in California and Massachusetts would reopen Monday under federal supervision, maintaining Silicon Valley Bank’s normal business hours. Banking activities, including online banking and other services, will resume Monday as DINB.
Roselli said news of the crash breaking just before the weekend gave the federal government time to put out a thoughtful response that likely kept the situation under better control.
"In a weird way, the fact that it was announced on a Friday gave the government the weekend to be able to react and present a the public with a plan on Sunday," he said. "Over the last 18 hours, I think entrepreneurs are breathing a collective sigh of relief. I don’t sense the panic on Monday that I sensed on Friday."
He added, "I don’t know of a single portfolio company here that expects to miss payroll because of this."
