Bailouts mean SVB customers’ deposits are safe, but the bank’s demise has sparked concern about future investment in small tech companies
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Regulators closed the bank after several days of turmoil following an announcement that it needed to raise US$2 billion to cover debts due to rising interest rates. This led to a run on the bank as several large venture-capital firms advised their clients to withdraw funds. The situation after the collapse was “absolutely terrifying”, says Ethan Cohen-Cole, chief executive of Capture6, a clean-technology start-up in Berkeley, California, that is developing ways of capturing carbon dioxide directly from the air . “Your first thought is: ‘This is the end of your company.’”
Sebastian Weidt, chief executive of Universal Quantum, a quantum-computing start-up in Brighton, UK, which had millions of pounds deposited with SVB UK, says he had a very stressful weekend. “We had to work under the assumption that our money would be gone, which means we had to find ways to recapitalize Universal Quantum,” he says. The company was in the fortunate position of having revenue streams after securing a €67-million deal with the German Aerospace Center based in Cologne .
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