Industries Impacted from SVB’s Collapse: Tech Startups, Life Sciences and Clean Energy

…So basically the innovation economy.

We may have dodged the worst-case scenario as tens of thousands of startups escape a near-death experience — but the industry just lost one of its biggest supporters.

Potential industries impacted by SVB’s collapse:

1/ Startup life gets harder. SVB was a crucial partner for early-stage tech companies, funding startups that were deemed too risky to other banks that demanded higher rates.

As a result, the cost of borrowing for startups will likely rise, and the pace of innovation could slow.

2/ Life sciences funding at risk. Developing new drugs is risky and expensive — a risk that SVB was willing to take, funding companies at a much faster rate than traditional banks.

At the end of 2022, 12% of SVB’s deposits belonged to healthcare and biotech companies. Without SVB, drug development businesses are losing an important partner, which could slow the industry.

3/ Clean energy sector gets shook. In 2022, SVB was the sixth-largest lender in the US renewables sector — and worked with nearly half of the clean-energy startups.

But per WSJ, there is more than enough appetite to fill the gap left by SVB, and SVB bankers could move existing relationships to other banks.

Will the spirit of SVB live on?

Venture capital firms are working on a plan to buy parts of SVB so that it can continue serving the tech sector — potentially forming a group of private bidders.

The bank’s operations have resumed under a new name — making it more attractive for a bidder to buy the bank’s assets. But it’s uncertain how the SVB’s startup-friendly ways could change under new leadership.