In the hours after Silicon Valley Bank collapsed on March 10, Pentagon officials who work directly with startups that develop national-security technologies grew increasingly concerned.
Would startups that had money in the bank need to stop work? If that happened, would there be supply-chain disruptions? Would a company under financial stress put its intellectual property at risk?
Officials prepared different courses of action to get cash to companies, if needed.
“It was a busy weekend, for sure,” Michael Madsen, acting director of the organization that acts as conduit between startups and the military, said Tuesday at a Reagan Institute event in Washington.
No immediate action was needed. The Treasury Department stepped in on Sunday and said depositors with funds at Silicon Valley Bank would have access to their money.
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“You know, I don’t think it’s a big concern of ours yet,” Pentagon Comptroller Mike McCord told reporters Wednesday on the sidelines of the McAleese and Associations Defense Programs conference.
Had the Biden administration not acted quickly to back up account holder funds at SVB, the United States—and the national-security community in particular—would have faced a major challenge in supporting and growing innovative new technologies, Michael Brown, a venture partner at Shield Capital and former head of the Defense Department’s Defense Innovation Unit, told Defense One.
Had SVB collapsed, Brown said, it would have hit some of the companies that he works with very hard. “You’re, you’re a small company, you raise money from your venture backers; you don’t maybe have revenue coming in yet and you can’t make payroll if you can’t access your cash balance? Yeah, it really would have been a horrific situation.”
It was a long weekend for startups that had money in SVB as well.
“The time from when we heard about this to when we were actually locked out of our accounts was six hours,” Eric Levesque, the co-founder and COO of strategic intelligence platform Strider, said at the Reagan Institute event. “I mean, if you didn’t move super fast…you went into the weekend basically not sleeping at night. So I think we all woke up Monday morning with a big sigh of relief. But it was a very close call.”
That sentiment was echoed by Joe Laurienti, the founder and CEO of propulsion tech company Ursa Major. “We were certainly impacted, though things turned around pretty quickly,” he said. “So I think…today, operations are as usual.”
While Silicon Valley Bank execs may have failed to hedge against interest rate risk, they did signal $73.45 million in virtue donating to Black Lives Matter and related entities, according to a database maintained by the Claremont Institute which lists nearly $83 billion in donations to the Marxist organization.
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