Upflex was one of about 37,000 companies around the globe caught up in the collapse and bank run on startups’ go-to bank SVB. Upflex CEO Christophe Garnier reflects on the event.
The past week and a half has been quite a ride for many of us navigating the fallout from the collapse of Silicon Valley Bank. Upflex has been banking with SVB since we raised our Series A exactly a year ago. In fact, SVB actually participated in that fundraising round.
From the day of the event — Friday March 10 — through Monday, we were in “war room” mode with Upflex CFO Steven Adler and the company’s board members; together, this group planned for the worst, but still hoped for the best, designing an emergency plan to mitigate potential disaster.
I’m grateful to say that Upflex’s board members and investors were at the ready to help, immediately. Not only did they help keep the business moving — they shared past experiences, which put things in perspective. Not all companies have been so fortunate.
Upflex’s funds had been immediately frozen — along with 37,000 other impacted small businesses that had deposits in excess of $250,000. The domino effect is going to be felt worldwide, as our CFO told Philip Russo at the close of last week for Commercial Observer‘s recent dive into the event’s impact on the proptech industry.
“The collapse affected not only companies in the United States, but also thousands of tech companies in the United Kingdom and Israel, in addition to all of the vendors that each of these companies work with.” Adler told Commercial Observer. “Payments will be delayed to tens of thousands of vendors, including many small businesses who service the startups impacted by these collapses.“
SVB’s almost ubiquitous presence across the world of proptech startups has amplified the impact of the collapse. “SVB had a unique position in the early entrepreneur environment, including proptech,” Adler explained. “It was unbelievably friendly. They were easy to bank with. They gave us credit facilities and credit cards. So you literally could start a business tomorrow, get a VC to invest in you, and SVB would bank you and give you credit cards and lines of credit up to a third of the capital raised.”
SVB’s financial impact was “unbelievably beneficial for the venture community because they would give us lines of credit for companies that were losing money. Nobody else would give you a loan. That’s going to be the final outcome that people don’t realize is the biggest impact. It’s the additional liquidity that all of us got — between 20 and 33 percent more money.”
These services — along with SVB’s stringent guidelines to drive loyalty to the bank — made SVB an obvious choice for a young, VC-funded company like Upflex. According to Commercial Observer, at least half the new companies were banking with SVB.
Moving forward, startups are taking these lessons to heart, and things are going to be different. Tens of thousands of startups and small businesses around the world have learned a great deal from the events and discussions of these past 10 days.
Read more in CO about the impact of the SVB collapse and the lessons learned, here.