Small businesses and non-profit organizations were also impacted by the collapse of Silicon Valley Bank, impacting their ability to pay employees or vendors.
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A Boston-based middle-market real estate and forestry management company, LandVest, is one of the thousands of non-tech businesses whose accounts were impacted by the failure of Silicon Valley Bank.
While SVB was well known among venture capitalists and the tech companies they funded, the bank had also acquired Boston Private Bank & Trust Company in 2021 whose clients ranged from small to medium-sized companies and non-profit organizations in various industries.
The FDIC stepped in on March 10 and closed SVB and said it would “pay uninsured depositors an advance dividend within the next week.”
“Uninsured depositors will receive a receivership certificate for the remaining amount of their uninsured funds,” the agency said. “As the FDIC sells the assets of Silicon Valley Bank, future dividend payments may be made to uninsured depositors.”
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For the past 40 years, Landvest banked with Boston Private and stayed with the bank after SVB acquired it, Joseph Taggart, president of LandVest told TheStreet. Landvest’s office was next door to Boston Private’s headquarters.
The shutdown of SVB is a “real problem” even though the “FDIC receivership isn’t spelling the end to our 55-year old company.”
“While I’m not interested in any vindication here, I would like to see some equity for the many ‘non-tech-VC’ companies who have been affected by this,” Taggart said. “The whole narrative seems to be around Silicon Valley here, but there are some boring old New England companies that have been devastated by all this.”
Taggart said he was able to transfer some of the company’s cash from SVB to one of its existing bank accounts on March 9. But the company did not transfer all of its cash to another bank because they were planning to do payroll on March 10.
“There were a lot of accounts that we had to leave active because we are transacting business all the time for vendors or payroll,” he said. “We had to sit and cross our fingers and see if that transaction would go through.”
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Landvest, which has annual revenue of $60 million, was also able to make payroll and ensure its 185 employees and numerous vendors were paid on March 10.
“We have access to other capital sources,” Taggart said. “We have ample capital and keep money in a variety of different sources and levels of savings.”
Despite having accounts at other banks, Taggart said the process has been “annoying.”
“It’s extremely frustrating,” he said. “When you look at all the corners on a daily basis in terms of markets, volatility and risk, thinking that our bank was going to fail was not one of them.”
For the past five years, Taggart said he has been “diversifying the company’s capital structure in blue chip institutions for which I am very grateful.”
In the past, the company had all their cash and accounts at SVB.
“For a time we had all our money there,” he said.
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Other companies were not so fortunate and their business was impacted by the closure of SVB.
Parker Conrad, CEO at Rippling, a payroll processing company, said they were not able to service payroll for all their clients on March 10.
But Conrad said the company chose to use their own funds to make some payments.
“We have separately posted our own collateral to issue these payments outside of SVB, through JPMorgan Chase,” he tweeted.
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Elizabeth Yin, co-founder of Hustle Fund, a VC fund that invests in pre-seed software startups, said a number of the founders were not able to make payroll on March 10 either.
“A # of my founders whose wires were blocked & have more than $250k in their svb accts are worried about making payroll today, next wk, & beyond,” she tweeted. “A lot of them are willing to take $0 salary personally but it’s the employees & contractors who will be disproportionately affected.”
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New York toy company Camp took a creative and unusual route to generate more sales since the company’s CEO Ben Kaufman sent out an email to its customers seeking help. He made light of a serious situation and told customers to use the promo code “BANKRUN.”
The company said in an email that most of its cash was held at SVB and that revenue from purchases would be deposited at Chase.
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“Camp needs your help,” the email said. “Unfortunately, we had most of our company’s cash assets at a bank which just collapsed. I’m sure you’ve heard the news. We are hopeful that this will be resolved soon, but in the meantime we are turning to you, our most valuable customers, to help us. All sales from this point forward will deposit into Chase & allow us to generate the cash needed to continue operations so we can continue to deliver unforgettable family memories.”
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