The collapse of Silicon Valley Bank led to tense moments for some Central Ohio tech companies with deposits there – but relief once the federal government assured they could access their funds Monday.
The bank's separate VC arm is among major shareholders in Root Inc., and the Columbus insuretech company also had $1.3 million in deposits there. But Root said in a release it will move that money "at the earliest opportunity" and does not expect any material impact on cash flow or liquidity.
Rev1 Ventures staff worked through the weekend to help several affected portfolio companies protect their assets, COO Kristy Campbell said.
Loop Returns, a fast-growing Columbus e-commerce startup, will have no negative impact from its banking relationship with SVB, founder and CEO Jonathan Poma said in a text message.
"SVB has been a remarkable partner, and without SVB, we and many other startups wouldn't have been able to build the business we've built to date," Poma said. "I hope that their legacy and their brand can live on and continue to help startups once the dust settles."
A few founders in the region took to Twitter to say they had no exposure to SVB.
Representatives from the $2.2 billion Columbus firm Drive Capital LLC were not immediately available for comment; several companies in its portfolio including Root had received investments from SVB Capital, a separate subsidiary from the bank. Parent SVB Financial Group owned 8.6% of Root stock as of Dec. 31, according to a February regulatory filing.
Some startups don't bank directly with SVB but their payroll processing vendor does, said Mark Shary, co-founder of Dublin VC firm Tamarind Hill, via email. There could be some delays, but the firm's portfolio companies were not harmed.
Executives with Columbus-based VC firm Loud Capital and its joint-venture social impact funds acted quickly to mitigate risk for portfolio companies, all while attending SXSW in Austin, said Wolf Starr, partner leading the impact funds and CEO of Atlas Venture Partners.
"This is definitely going to make work harder for many in the venture community, but ultimately this will not set our funds or our portfolio companies back significantly in any way," Starr said.
Bill Baumel, managing director of Columbus-based Ohio Innovation Fund, said via email he was not aware of any portfolio companies with SVB deposits.
Silicon Valley Bank, with $211 billion in assets as of Dec. 31, was the go-to financial partner for tech startups and venture funds around the country, not just in its eponymous region, reports the San Francisco Business Times. But a bank run started at the urging of some prominent VCs on Thursday led to a stunningly swift collapse; state and federal regulators shut its doors Friday morning.
Deposit insurance covers only $250,000 in any one account, and tech companies often are moving millions. To calm systemic fears of the tech sector not making payroll, U.S. officials Sunday night said customers would be able to access their entire funds as of this morning.
The financial services division of the Ohio Department of Commerce, which licenses banks in the state, is monitoring state-chartered institutions for any ripple effects, a spokesman said.
From Thursday morning through Sunday evening, Poma said, the Loop finance team and directors were "very active to ensure that no employees or continuity of business operations at Loop were impacted in any way."`
They were able to ensure operations would have had no immediate impact even without the federal action, he said.
The CEO of an early stage 15-person Columbus startup, Strongsuit, said in a Twitter thread on Friday that she had tried to move the company's money out of SVB, but the wire transfer did not go through. Additional comment was not immediately available from the founder.
Strongsuit was one of several impacted in the portfolio of Rev1 Ventures.
"Our team worked quickly with our clients over the weekend to assist them in shifting their assets to alternative providers, while also advocating behind the scenes for a resolution that would allow them to fully recover their assets," Campbell said Monday via email. "We are relieved that the outcome is positive for our clients and are thankful for our many financial services partners for their support."
