What impact with Silicon Valley Bank faillure have on food startups?
Federal bank regulators announced late Sunday that depositors at the Silicon Valley Bank will have access to all their money this morning, but the failure of the bank still raises the possibility that food startups could be affected by the situation.
The combination of wealth from high-tech firms and creative thinking on the West Coast has led San Francisco and Silicon Valley to be a center for companies focused on new ideas in food such as plant-based and cell-based production and addressing problems such as food waste.
People who have made money in Silicon Valley have shown great interest in investing in food startups of all kinds and the companies’ banking relationships are often in institutions in the San Francisco Bay area.
National Public Radio reported over the weekend that Shelf Engine, a Seattle-based food management startup that offers solutions to food waste, had its cash in SVB, and on Friday failed in an attempt to move its money to JP Morgan Chase.
Federal deposit insurance covers deposits only up to $250,000, but many startup companies that raise venture capital had much more money than that at SVB.
Last week, companies became concerned that higher interest rates could make it difficult for SVB to do business and began withdrawing more money than SVB had on hand. On Friday, the federal regulators took over SVB amid fears that the contagion would spread to other banks. On Sunday federal regulators revealed that New York regulators had closed Signature Bank.
Late Sunday, the Federal Reserve, Treasury and Federal Deposit Insurance Corporation announced in a joint statement that “depositors will have access to all of their money starting Monday, March 13.”
President Biden also said in a statement that at his direction, Treasury Secretary Janet Yellen “and my National Economic Council director worked diligently with the banking regulators to address problems at Silicon Valley Bank and Signature Bank. I am pleased that they reached a prompt solution that protects American workers and small businesses, and keeps our financial system safe. The solution also ensures that taxpayer dollars are not put at risk.”
“The American people and American businesses can have confidence that their bank deposits will be there when they need them,” Biden said.
“I am firmly committed to holding those responsible for this mess fully accountable and to continuing our efforts to strengthen oversight and regulation of larger banks so that we are not in this position again.”
Biden also said he would deliver remarks “on how we will maintain a resilient banking system to protect our historic economic recovery.”
The Federal Deposit Insurance Corporation was named the receiver of SVB and took over its website and operations.