The collapse of Silicon Valley Bank has significant consequences for startup businesses, who have increasingly relied on the institution as a lender of last resort. The shutdown also impacts venture capitalists and startup founders that banked with SVB, disrupting their ability to access necessary financing and leading to potential losses.
Venture debt investors are not panicking just yet. Banks such as SVB have long been thought of as the go-to bank for venture lending, so they may have more experience and resources to weather this storm. However, if other banks start to crumble, then venture capitalists may become less willing to invest in early stage companies. This could hit the already nascent $128 billion venture debt market hard, potentially leading to a slowdown in startups accessing funding.