Since the announcement, several public firms who held cash or credit with SVB have issued statements that they will be unaffected by the bank’s failure, including BuzzFeed, DSP AcuityAds and ad-tech firm Direct Digital Holdings. The majority of Oarex’s clients who banked with SVB have moved funds, though some have stayed at the now government-controlled entity, Carrabbia said.
Tech publisher The Information quickly moved its cash reserves away from Silicon Valley Bank and is setting up bank accounts with multiple banks, said CEO and founder Jessica Lessin.
“We were really lucky to get our money out of Silicon Valley Bank early,” she said. “This was definitely a catalyst to thinking more strategically about banking.”
More scrutiny
Despite the regulatory relief, headwinds still abound. Kargo is still working to prop up its publisher clients even after the government’s Monday announcement, Kargman said.
“[Publishers] may not have credit lines at the new institutions, which are tied to years of relationships and deposit histories,” Kargman said. “We may be able to help there, and that is now a bigger issue with the shifting of funds.”
In government receivership, Silicon Valley Bank is operating as normal, including for companies that hold credit facilities. In a press release, the FDIC said SVB’s loan customers should continue making loan payments as usual.
There is a tremendous opportunity for companies to be a guide for helping founders figure out the new playbook
Jessica Lessin, CEO and founder The Information
Still, publishers and ad-tech firms may have to turn to existing investors or change their business plans to become more profitable sooner depending on the cash reserves and risk appetite of regional banks, said Stephen Master, managing director at private equity firm GTCR and an ad-tech investor.
“SVB was a provider of liquidity to a lot of these companies and, in general, regional banks are really important in providing liquidity to startups who are not going to get the attention of Bank of America,” Master said. “If all of these regional banks are less aggressive in providing loans to ad-tech startups, that’s going to be a medium-term issue.”
There are other potential long-term business consequences to the bank’s collapse. Before undertaking new financial relationships, companies may be careful about reading the fine print about where new potential business partners bank, said Ashwini Karandikar, EVP of media, tech and data at industry trade organization the 4As.
“Currently, for the standard tech contracts, there isn’t in-depth visibility about who their bank is, and where the money is, or can they sustain the business,” Karandikar said.
But, every collapse also presents an opportunity. The Information’s traffic spikes around the business news story—the publisher had 5.2 million email opens in 72 hours—has received inbound interest from advertisers wanting to associate themselves with the publication’s authoritative coverage of the crisis, Lessin said. Uncertainty creates opportunities for publishers and brands that serve startups, she added.
“There is a tremendous opportunity for companies to be a guide for helping founders figure out the new playbook,” Lessin said.
