FOR IMMEDIATE RELEASE
March 11, 2023
Contact: Robin Ceppos
WASHINGTON, DC– The National Venture Capital Association (NVCA) has been closely monitoring the SVB situation as it unfolds, to help the startup community navigate this unprecedented turbulence. With the FDIC stepping in Friday morning to close the bank, where a large share of VC firms and VC-backed startups all across the country held deposits, there will be immediate, short, and long-term impacts on the startup ecosystem.
NVCA is discussing the potential consequences of a failure of this central part of the financial plumbing of the innovation ecosystem with a range of policymakers and industry leaders. The implications for company and fund operations are far-reaching. NVCA is also working to provide guidance to the venture community where possible.
The most pressing concern is that many companies have deposits far in excess of the FDIC-insured amount of $250,000, which may not cover payroll for many companies. Without access to additional funds, or if access is delayed, companies will be faced with difficult decisions ranging from furloughing employees to potentially shutting down.
These decisions could have a lasting impact on the industry and the country. VC-backed companies are the engine for innovation and the development of lifesaving and life-changing technologies. Advances in cybersecurity, biotechnology, climate tech, and other critical technologies run the risk of major setbacks that could have profound consequences for the long-term competitiveness of the U.S. economy.
The startup ecosystem is critical to the country’s economy and innovation, and this is a pivotal moment that will decide the fate of many ground-breaking companies of tomorrow.