1 year ago
59 An worker gets into his car aft arriving to enactment to a shuttered Silicon Valley Bank (SVB) office connected March 10, 2023 successful Santa Clara, California.
Justin Sullivan | Getty Images News | Getty Images
The illness of Silicon Valley Bank was a "Lehman moment" for the exertion industry, according to a apical Goldman Sachs dealmaker.
Cliff Marriott, co-head of technology, media and telecoms successful Europe for the concern banking part of Goldman Sachs, said that the March 10 shutdown of SVB was "pretty stressful," arsenic the lender's clientele scrambled to fig retired however they would marque payroll.
"That archetypal play was a small spot similar the Lehman infinitesimal for exertion and it was truly much operational for those companies," Marriott told CNBC's Arjun Kharpal.
"They needed entree to capital. A batch of their balances were connected SVB. And, secondly, SVB was propelling and making a batch of their payments for payroll to wage their employees."
Founded successful 1983, SVB was considered a reliable root of backing for tech startups and task superior firms. A subsidiary of SVB Financial Group, the California-based commercialized lender was, astatine 1 point, the 16th biggest slope successful the U.S. and the largest successful Silicon Valley by deposits.
SVB was taken implicit by the U.S. authorities aft its clientele of task capitalists and tech startups withdrew billions from their accounts. Many VCs had advised portfolio companies to propulsion funds connected the backmost of fears that the lender whitethorn crumble.
SVB Financial Group's holdings — assets specified arsenic U.S. Treasury bills and government-backed owe securities that were viewed arsenic harmless — were deed by the Fed's assertive involvement complaint hikes, and their worth dropped dramatically.
Earlier this month, the steadfast revealed it had sold $21 cardinal worthy of its securities astatine a astir $1.8 cardinal nonaccomplishment and said it needed to rise $2.25 cardinal to conscionable clients' withdrawal needs and money caller lending.
The aboriginal of SVB remains uncertain, adjacent though deposits were yet backstopped by the authorities and SVB's government-appointed CEO attempted to reassure clients that the slope remained unfastened for business.
Marriott said that determination is "still a large question people regarding what slope oregon steadfast oregon acceptable of firms is going to regenerate SVB successful presumption of providing those utility-like services for technology, giving them slope accounts, allowing them to marque payroll, holding their currency balances."
The SVB illness has besides raised questions implicit the imaginable consequences for different banks, with SVB being acold from the lone lender that has travel nether strain. Swiss concern banking titan Credit Suisse was rescued by its main rival UBS successful a government-backed, cut-price deal past week.
Marriott besides addressed tech IPOs and their outlook for 2023. Europe's tech IPO marketplace has been mostly closed owed to a confluence of marketplace pressures, including higher involvement rates, which marque the aboriginal cashflows of high-growth tech companies little attractive.
Marriott said that helium would person been much optimistic astir a betterment successful tech IPO enactment 2 weeks ago.
"I'm inactive hopeful that we'll spot tech IPO enactment successful 2023. And if we don't, I deliberation 2024 volition beryllium a large twelvemonth for tech IPOs," Marriott said.
"I deliberation what we'll spot is the much established profitable companies travel first, truthful the easier to recognize concern models, profitable companies, earlier we spot the truly highly valued nett oregon antagonistic nett companies that we saw successful 2021."
