Venture capitalists and startups breathed a sigh of relief on Sunday when the FDIC announced it would backstop all Silicon Valley Bank deposits. But the industry won't be able to just walk away from this mess now that depositors will be made whole.
When SVB collapsed last Friday, it kicked off the biggest banking crisis since 2008 and rattled the tech sector that it had served for about 40 years. The loss of SVB will be felt for a long time in myriad ways across tech.
For one thing, the impact will be especially hard on diverse founders, people of color, and women looking to build their businesses who found a willing, and sometimes sole, partner in Silicon Valley Bank.
"Only SVB was there for most of the underrepresented founders I know and work with," said Mendoza Ventures Partner Asya Bradley. "For under-represented founders, they often can't get accounts at the top four banks, so the community of Black and Brown founders has been reeling, 'What are we going to do?'"
Data shows that founders of color are far less likely to receive VC funding and small business loans. For example, in 2022, Black founders raised just 1% of all venture funding, according to Crunchbase data. Additionally, Black business owners struggle to access bank loans at the same rates as white counterparts – and the collapse of SVB could create an even more profound gap.