UK Government’s Swift Action
The United Kingdom is stepping up to the plate with an emergency plan designed to rescue startups and tech companies reeling from the shockwaves of the Silicon Valley Bank (SVB) collapse. Prime Minister Rishi Sunak announced on March 12 that the government is hustling to devise a functional lifeline to ensure that the operational liquidity and cash flow needs of SVB’s UK clients are met.
Ensuring Operational Liquidity
The UK Treasury is pulling out all the stops, with an explicit message to the business community: “We’re on it!” Their rapid response aims to address short-term operational and cash flow requirements for those affected businesses as swiftly as possible. With a number of promises on the table, this optimistic approach hopes to minimize the damage to what they call “some of our most promising companies.”
Bouncing Back from Insolvency
As the Bank of England (BoE) pressed the pause button on SVB branches operations in the UK, they offered a silver lining regarding potential insolvency. Eligible depositors could see their funds returned swiftly, notably up to £85,000 (about $102,288) or £170,000 (around $204,577) for joint accounts through the Financial Services Compensation Scheme.
A Call to Action from the Startup Community
The urgency of this plan was underscored by over 200 tech founders and CEOs who penned an impassioned letter to Chancellor Jeremy Hunt. With many fintech firms relying solely on SVB for their banking needs, they stressed that immediate government intervention is critical to prevent a wave of receiverships. Talk about putting the pressure on!
The Bigger Picture
Silicon Valley Bank wasn’t just any lender; it catered to over 40,000 small businesses and myriad crypto-friendly venture capital firms throughout the U.S. The shock of its sudden closure after failing to raise $2.25 billion in capital has sent ripples through the tech ecosystem, especially within the Web3 community, which entrusted SVB with assets amounting to over $6 billion.
