Following the collapse of Silicon Valley Bank last week, a lot of companies and entrepreneurs have been making the flight to — at least perceived �

The Silicon Valley Bank fallout is just beginning

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2023-03-16 09:00:03

Following the collapse of Silicon Valley Bank last week, a lot of companies and entrepreneurs have been making the flight to — at least perceived — safety. That means the biggest banks have been getting more deposits: JPMorgan Chase, Bank of America, Citigroup, and Wells Fargo.

“Everyone is asking, ‘Where should we bank? Where is it safe to bank?’” Ryan Gilbert, founder of Launchpad Capital, told Silicon Valley Business Journal. “When you think you bank with the safest bank in your ecosystem, and they disappeared overnight, you realize it’s impossible to predict an earthquake.” He moved his account to Chase.

Startups such as Brex, Mercury, and Meow have also benefited. Brex specializes in corporate credit cards; Meow, in letting people earn interest on government bonds, among other services. (Meow also gives people accounts at BNY Mellon Pershing, another big bank.) “We’ve been flooded with inbounds, and we’ve been working nonstop,” Meow CEO Brandon Arvanaghi told me in a telephone interview. These aren’t just startups or customers from SVB, though that was the initial wave, he says.

”Everyone’s starting to think about counterparty risk,” says Arvanaghi, which is the risk that someone you make an agreement with might not hold up their end of the bargain. If a bank fails, the FDIC isn’t obligated to make good on its loan agreements, for instance. In the case of SVB, the bank has also said it will honor its debt obligations — not a certainty a week ago! — and is even making new loans.