A hastily assembled WhatsApp group, then relief: UK tech firms react to SVB | Silicon Valley Bank

UK tech firms breathed a “collective sigh of relief” on Monday after a rescue of Silicon Valley Bank’s British arm was announced, amid fears that failure to broker a deal would have plunged the industry into an immediate crisis.

Industry insiders said a WhatsApp group called “save UK tech” was hastily assembled over the weekend as the sector attempted to stave off the threat of financial problems swamping tech firms as soon as Monday. A crisis was averted, however, when the government helped broker the acquisition of SVB’s UK operations by HSBC for £1 in a deal announced on Monday morning.

Russ Shaw, the founder of Tech London Advocates, an industry body, said tech firms and investors heaved a “collective sigh of relief” when the deal was announced.

Over Friday, Saturday and Sunday, Shaw said people were “pulling their hair out saying: ‘What do we do?’” Shaw said UK tech firms’ financial exposure to SVB ranged from £25,000 at the lower end of the scale to more than £10m.

One UK company that banked with SVB said the lender’s troubles were an “existential threat”.

Dan Murray-Serter, a co-founder of London-based Heights, which sells health supplements for the brain and gut online, said: “It would have been a scenario of not being able to pay for stock, not being able to serve our customers and being on the hook for paying invoices. We would not have been able to pay.”

Murray-Serter said his fellow founder withdrew money from the company’s current account on Friday when the seriousness of SVB’s problems emerged but the rest was tied up in a 30-day notice account. He added that fellow entrepreneurs and business owners joined an early evening call with SVB on Friday in which they were told that the UK business was separate from the troubled US operation.

The call made “everyone seem very calm”, Murray-Serter said, only for the Bank of England to declare hours later that it was prepared to start insolvency proceedings for SVB UK.

Prior to last week, banking with SVB, a long-established bank, was not seen as risky for companies, Murray-Serter added. “This was genuinely the most sensible place for innovative startups,” he said.

Referring to the government’s rescue efforts, he said: “I am not a Tory and I have to say I am unbelievably surprised about how this was resolved so quickly, in the right way.”

James McAulay, a co-founder and the chief executive of Encore, an online marketplace for musicians, said there had been no communication from the bank over the weekend. McAulay said the company attempted to transfer money out of its account at 10am on Friday but the money was still in the account by late afternoon, hours before the Bank of England said it was prepared to start insolvency proceedings for SVB UK.

“The lack of communication from SVB was absolutely shocking. As a customer, this weekend we got absolutely nothing from SVB,” McAulay said.

skip past newsletter promotion

Sign up to Business Today

Get set for the working day – we’ll point you to all the business news and analysis you need every morning


“,”newsletterId”:”business-today”,”successDescription”:”We’ll send you Business Today every weekday”}” clientonly=”true”>Privacy Notice: Newsletters may contain info about charities, online ads, and content funded by outside parties. For more information see our Privacy Policy. We use Google reCaptcha to protect our website and the Google Privacy Policy and Terms of Service apply.

Companies listed on London’s Stock Exchange with links to SVB UK or its US parent expressed relief on Monday that the bank’s rescue would not have a lasting impact on their own operations.

The wine retailer Naked Wines said it did not expect the group to face a hit to its operations or any losses as a result of the failure of SVB’s US entity, which was one of its banking partners. Naked Wines was not a customer of SVB UK.

Nick Devlin, the group chief executive of Naked Wines, said: “While this situation remains fluid, we maintain a robust balance sheet with approximately £185m of stock and £17m of immediately accessible cash.”

Moonpig, the greetings card company, reassured shareholders that while SVB UK was one of 10 lenders that provide it with debt facilities, it had no cash on deposit with the lender, and did not hold a bank account there.

Diaceutics, a London-listed company that describes itself as a technology and solutions provider for the pharmaceutical industry, said it had “comfort” that it would be able to fully recover the £19.8m of cash and cash equivalents held on deposit with SVB UK, having requested a temporary suspension of its Aim-listed shares on Monday. It said it was also seeking to gain access to £2.2m held on deposit at SVB’s US parent, which it expected to be able to access in the near future.

( Information from politico.com was used in this report. Also if you have any problem of this article or if you need to remove this articles, please email here and we will delete this immediately. [email protected] )

Leave a Comment

Share to...