On Monday morning, there were reports of uncertainty, panic, and urgency from individuals who had spoken with UK-based tech firms that had accounts with Silicon Valley Bank, which failed dramatically at the end of the previous week. The UK arm of the bank, which had over 3,000 business customers, has since been rescued by HSBC, but the online banking service remains frozen. Silicon Valley Bank was primarily used by the tech sector, and there has been some debate about the level of sympathy UK taxpayers should have for the “tech bros” in the event of Treasury intervention. However, the individuals who have spoken with the affected tech firms report that they do not fit that description.

After the collapse of Silicon Valley Bank, it was unclear how much operational cash was left in limbo, leaving many workers uncertain whether they would get paid that month. One worker expressed her hope that she would still receive her salary. Silicon Valley Bank was not only the main bank for those affected but also their only bank. Melanie Hayes, managing partner at venture capitalist firm BGV, which also exclusively banked with SVB, suggested at the next board meeting discussing resource concentration and identifying any other areas of concentration risk. The advice to not put all your eggs in one basket was reiterated, emphasizing the need to choose big, robust, and protected baskets that are less likely to fail and be prevented by regulators and governments. However, this can be challenging for tech start-ups.

According to Elin Haf Davies, founder of med-tech start-up Aparito in Wrexham, the main High Street banks are less supportive of start-ups because they are perceived as higher risk. She noted that Silicon Valley Bank was a popular choice among the med-tech sector, including both her competitors and clients, many of whom are based in the US. Aparito is still assessing the potential impact of its clients’ banking issues on its cash flow. In addition to financial services, Davies suggested that start-ups should consider the diversity of their client base to ensure a secure revenue stream, although she acknowledged that this can be challenging. The notion that large banks are less enthusiastic about serving start-up customers is a common one, as per Davies’ observations.According to Melanie Hayes, challenger banks are a popular choice among many start-ups due to their more straightforward account opening procedures. She noted that it can be difficult for start-up businesses to open an account with a traditional High Street bank, although the reasons for this are unclear. Chris Edson from Second Nature, a firm that helps Type 2 diabetes patients manage their lifestyles, reported that his company recently switched from banking with Metro to Silicon Valley Bank.

Chris Edson from Second Nature reported that his firm had moved some money into a fixed-term bond before the news about Silicon Valley Bank broke, but still had around £1m in the account. He explained that the firm was faced with the dilemma of whether to withdraw the cash and potentially exacerbate the issue or wait. Opinion was divided among the founders in a WhatsApp group, but in the end, Mr Edson decided to transfer the funds back to the old Metro account on Friday morning. Although the money appears to have left SVB, it has yet to arrive in its new location. However, he remains confident that all will be well under HSBC ownership. He noted that every chief financial officer has been working throughout the weekend to address the issue, and Sunday’s events have shaken the VC world to its core.

The situation has brought the tech sector together in an unusual moment of collaboration, with tech bosses sharing practical information such as lists of banks that could quickly open accounts and personal contacts who may be able to help. They are also coordinating a data-gathering exercise to determine the extent of the problem, which requires sharing sensitive company information such as the amount of money at risk and cash flow requirements. Ms Hayes noted that they had seen others sharing solidarity and support, and it was good to see everyone pulling together.