SVB collapse is double-whammy for tech startups already navigating brutal market

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Startup founders across the U.S. were already cutting costs and preserving cash before Silicon Valley Bank's failure this month complicated their situation.

Wasabi had raised its prior round a year earlier, when the market was humming, IPOs and special purpose acquisition companies were booming and investors were drunk on low interest rates, economic stimulus and rocketing revenue growth.

"The world was falling apart as we were putting the deal together," said Friend, who co-founded the Boston-based startup in 2015 and previously started numerous other ventures including data backup vendor Carbonite. "Everybody was scared at the time. Investors were just pulling in their horns, the SPAC market had fallen apart, valuations for tech companies were collapsing."

"If I didn't have a good management team in place to run the company day to day, things would have fallen apart," Friend said, in an interview before SVB's collapse. "I think we squeaked through, but if I had to go back to the market right now and raise more money, I think it'd be extremely difficult."

Loverro was hearkening back to the period when the market turned, starting in late 2021. The Nasdaq hit its all-time high in November of that year. As inflation started to jump and the Federal Reserve signaled interest rate hikes were on the way, many VCs told their portfolio companies to raise as much cash as they'd need to last 18 to 24 months, because a massive pullback was coming.

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Silicon Valley Bank’s parent company files for bankruptcy protectionSVB Securities and SVB Capital were not included in the filing by SVB Financial Group.
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