The FDIC’s decision to take over Silicon Valley Bank on Friday could leave many digital health companies scrambling to pay staff and suppliers.
SVB is the 16th largest bank in the US and is a big bank for technology companies, startups and venture capital firms. The bank said on its website that it had $78.8 billion in health care deposits and investments as of December. Protect all depositors. The FDIC on Monday moved all assets from Silicon Valley Bank to Bridge Bank, Silicon Valley Bank, NA While the digital health industry’s short-term concerns have been addressed, a lot of uncertainty remains in the wake of the bank’s collapse.
Experts say SVB’s failure is another sign that the digital health venture capital market is long past its peak. Funding has slowed sharply from 2021 highs. While the 2022 funding total is the second-best year since 2010, when digital health business and technology began tracking data, the fourth quarter was the lowest quarterly funding total in five years. Most experts say 2023 will be worse.
” said Matt Wolf, director and senior healthcare analyst at consulting firm RSM. “This is the environment that digital health operators need to adapt to. “
SVB’s collapse and FDIC’s quick takeover follows a run on bank depositors on Thursday. It’s worth noting that the FDIC didn’t wait until the close of business to take over the banks, which is Typical of an orderly closure of a financial institution.
The FDIC created the Deposit Insurance National Bank of Santa Clara and immediately transferred all insured deposits there upon closure. The regulator said, All insured depositors have until Monday morning to fully utilize their insured deposits, and customers with accounts over $250,000 were told to contact the FDIC on Friday.
SVB FDIC said at the time of the collapse Has total assets of $209 billion. A report by S&P Market Intelligence states that 97.3% of its deposits are uninsured.
Digital Health Economy Bank
SVB is the bank for many digital health startups and VCs. According to data cited on its website, the bank was involved in 76% of VC-backed healthcare IPOs since 2020 Adopted.
Its digital health clients include home healthcare provider DispatchHealth, which raised $330 million in funding from SVB in November; Secured a $300 million line of credit in November from SVB ( in partnership with Hercules Capital for the line of credit); and physician support firm Privia Health. According to the bank’s website, SVB said it has a $100 million financial commitment to Privia.
DispatchHealth said its business would continue to operate as normal, and it filed additional questions with the FDIC. Privia and Oak Street Health did not respond to a request for comment.
Digital health customers with uninsured accounts were being insured in the hours before the FDIC stepped in, according to a financial analyst. Attempt to withdraw deposits from SVB while other banks requested anonymity to comment on deposits secured.
Dr. Michelle Longmier, CEO of clinical trial technology company Medable Michelle Longmire said on Twitter that she was “sad but relieved to report that I survived a bank run. “
SVB’s failure forced companies to change some of their plans.
“One of our companies is in the process of [capital] financing. In light of SVB’s news, the company simply changed the wire transfer instructions to move the funds to another bank,” said Scott Kolesar, co-founder and managing director of venture capital firm Caduceus Capital Partners.
Associated Press contributed.
