Silicon Valley Bank’s Collapse Causes Strain for Young Companies
Josh Butler, the chief executive of CompScience, a workplace safety analytics start-up, said he was unable to get his company’s money out of the bank on Thursday or before the bank’s collapse on Friday. The last day, he said, had been nerve-racking.
“Everyone from my investors to employees to my own mother are reaching out to ask what’s going on,” Mr. Butler said. “The big question is how soon will we be able to get access to the rest of the funds, how much if at all? That’s absolutely scary.”
CompScience was pausing spending on marketing, sales and hiring until it solved more pressing concerns, like making payroll. Mr. Butler said he had been prepared for a big crunch, given the doom and gloom swirling around the industry.
But “did I expect it to be Silicon Valley Bank?” he said. “Never.”
Camp, a start-up selling gifts and experiences for children, added a banner to its website on Friday that read: “OUR BANK JUST CLOSED — SO EVERYTHING IS ON SALE!”
The site offered 40 percent off with the promo code “bankrun” alongside a meme that included the words “i never liked the bay area” and “how could this happen.” A Camp representative said the sale was related to Silicon Valley Bank’s collapse and declined to comment further.
Sheel Mohnot, an investor at Better Tomorrow Ventures, said his venture firm advised its start-ups on Thursday to move money into Treasuries and open other bank accounts out of prudence.
“Once a bank run has started, it’s hard to stop,” he said.
Some of the start-ups that Mr. Mohnot’s firm has invested in chose not to move their money, while others were unable to act in time before the bank failed, he said. Now their biggest concern was making payroll, followed by figuring out how to pay their bills, he said.