We are (were) a Silicon Valley Bank UK depositor and only managed to get out a third of our balances on Friday.
Despite our current financial vulnerability to this crisis — we only recently raised — I personally don't believe a bailout or any form of support by the UK government should be offered.
The same VCs that are asking me to sign a letter saying 'I will bank with SVB UK if the government was to support it' are the same ones that told me and their other portfolio companies to pull the plug. Publicly everyone has supported SVB UK on LinkedIn, etc., but in the Slack and WhatsApp groups behind the scenes the message was clear: withdraw and give notice on any treasury solutions asap.
This was a debacle of our own making, and the UK taxpayer should not put a single penny towards bailing it out. The last thing I want as a tech founder is for the industry to be seen as unsustainable by the public and held in low regard — akin to how investment bankers have been seen since the 2008 global financial crisis.
This was a debacle of our own making, and the UK taxpayer should not put a single penny towards bailing it out
The sector will recover
The sector will recover. Already founders are proposing solutions to support each other to meet financing shortfalls. Some businesses will really struggle, but honestly, this is a harsh lesson in how to run an actual finance function internally. This is something that almost every startup and VC is terrible at, except maybe in highly-regulated industries where they are required to by an external party.
While SVB were important to the sector, their communication was what killed them.
Despite SVB UK's assurances that its balance sheet was "ring-fenced", everything was in the US. I don't believe there was a conceivable way the UK subsidiary could run a fully-fledged bank overnight even though its balance sheet was segregated. I would rather lose those fixed-term deposit positions than watch this sector become a basket case in the public eye because we couldn't handle our own finances.
The only customers I feel most bad for are those with significant credit facilities as they need these to trade day-to-day. However, even then, new and innovative solutions are being proposed really quickly to support them across the founder ecosystem. This has been great to see.
This is not a banking crisis, but a blip in our specific segment that we can and will solve
This is not a banking crisis, but a blip in our specific segment that we can and will solve. We shouldn't expect the government to step in and prop it up any further; we already benefit from a ton of tax breaks in this country, R&D grants, the Patent Box scheme and the most lucrative investor incentives in the western world. If we can't manage our own money better, that is on us, not the taxpayer.
The author is a founder in the UK.
