Founder of venture capital firm and digital health firm is packing up after eventful days tied to Silicon Valley bank collapse Endgame.
“All our money is in Silicon Valley Bank. They are our complete banking partner,” said CEO and Founder of Text-Based Pediatric Care Provider Summer Health Says Ellen DaSilva. “When I started my company, I would say everyone in my life banked at SVB too.”
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The FDIC took control of the deeply held bank on Friday after a run on depositors Popular bank for digital health companies and venture capital firms. On Sunday, the Treasury Department, the Federal Reserve and the FDIC said the government would fully protect all depositors from Silicon Valley banks. On Monday, the FDIC moved all assets from Silicon Valley Bank to Bridge Bank, Silicon Valley Bank, NA
SVB said on its website it had $78.8 billion in healthcare deposits and investments as of 12 Since March, I have been involved in 76% of healthcare-related IPOs since 2020.
“I don’t know if I know a founder, who I’m friends with and who at some point has no relationship with SVB,” says food and health home delivery company FarmboxRx said Ashley Tyrner, CEO and founder of .
About 14% of FarmboxRx’s funding is held by SVB, a significant portion of which is venture debt, Tyrner said.
“We built the relationship there because the big banks, like Bank of America [and] Wells Fargo, they didn’t want to extend credit. They weren’t as friendly as the founders, said Tyrner. “So really, that’s the path of least resistance.”
While the short-term issues of the digital health industry, such as the ability to pay employees and suppliers, have been resolved, the industry Uncertainty remains over how it will emerge from bank failures. Industry stakeholders say that while the incident underscores the importance of diversity at banks, institutions like SVB are still needed to fund digital health innovators.
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Hemant Taneja, CEO of venture capital firm General Catalyst, said he would like to see Silicon Valley Bank return in some form. 100 VCs signed a letter in support of SVB, saying they would do business with SVB if it were reborn.
“We need banks like Silicon Valley Bank to understand how to support these innovation-oriented companies to thrive and become a vital part of the ecosystem,” Taneja said.
But Taneja also told portfolio companies to diversify and park their money in several banks rather than relying on one.
Multiple digital health companies say banking with SVB is often the path of least resistance as it is recommended by venture capital firms and peers. However, that allure quickly faded as banks reported mounting losses.
At Summer Health, DaSilva said emergency conversations took place in the days leading up to the bank closure. While the company wasn’t required to take those steps, DaSilva said its three largest venture partners were supportive and helpful.
Likewise, Taneja said he was putting together loan documents to help fund dozens of the firm’s portfolio clients before the federal government stepped in. With a sigh of relief, he said, the industry can resume its work of destroying health care.
“It was a brighter Monday than we expected yesterday,” Taneja said.
This story first appeared on Digital Health Business & Technology.