The demise of Silicon Valley Bank will spread ripples throughout America’s economy.
Silicon Valley Bank’s main focus was funding technology startups, according to CNBC. Although the Federal Deposit Insurance Corp. insures up to $250,000 per client deposit, CNBC said the FDIC’s protection has limited impact because most of its customers were businesses.
As of December, about 95 percent of the deposits at Silicon Valley Bank were not insured, Securities and Exchange filings said.
That’s bad news for companies like the TV streaming company Roku, which had $487 million in Silicon Valley Bank, most of which is not insured, according to The New York Times. Roku said in an SEC filing that it did not know “to what extent” it would be able to recover the cash.
This means that 65,000 startups could miss payroll
This can create huge problems for the startup and tech economy$SIBV was the 15th largest bank in the U.S by deposits and held $210 billion in assets
SVB was the second-largest banking failure in US history
— Andrew Lokenauth (@FluentInFinance) March 11, 2023
A report on CNN listed Toronto-based AcuityAds Holding, which had 90 percent of its cash in the bank, and Crypto currency lender BlockFi, which had $277 million in the bank.
The report also cited Roblox, an online gaming company that said 5 percent of its $3 billion in cash was in the bank.
Roblox had almost 59 million daily active users in 2022, according to the website DemandSage.
Based on data as of the third quarter of 2022, the company expects to have 3 billion accounts some time this year.
Roblox said in an SEC filing that despite the fall of Silicon Valley Bank, there is no expected impact on daily operations.
Over at Etsy, however, it was a different story, according to CNBC.
“We wanted to let you know that there is a delay with your deposit that was scheduled for today,” the email from Etsy said.
Etsy used Silicon Valley Bank to pay vendors who sell on the site and had to halt those payments Friday when the bank’s assets were seized.
“We know that you count on us to help run your business and we understand how important it is for you to receive your funds when you need them,” the email said. “Please know that our teams are working hard to resolve this issue and send you your funds as quickly as possible.”
Small sellers were anxious, according to the New York Post.
“I’m a mom of three. I run a small business,” said Amber Fields of Louisville, Kentucky, who sells under the name of Little Miss Lovely Creations.
“Those funds feed my family and pay my bills,” she said.
This article appeared originally on The Western Journal.
