{"id":8113,"date":"2023-03-17T16:17:23","date_gmt":"2023-03-17T16:17:23","guid":{"rendered":"https:\/\/www.headlandconsultancy.com\/international\/?post_type=insight&p=8113"},"modified":"2023-03-30T10:01:14","modified_gmt":"2023-03-30T10:01:14","slug":"after-the-collapse-of-silicon-valley-bank-what-next-for-tech","status":"publish","type":"insight","link":"https:\/\/www.headlandconsultancy.com\/international\/insight\/after-the-collapse-of-silicon-valley-bank-what-next-for-tech\/","title":{"rendered":"After the collapse of Silicon Valley Bank, what next for tech?"},"content":{"rendered":"\n

After the collapse of Silicon Valley Bank, what next for tech?<\/strong><\/p>\n\n\n\n

After a bruising winter for many tech firms, the collapse of SVB last weekend was a further shock to the system. And it will be seen by some critics as another sign of tech\u2019s vulnerability in a higher interest rate environment. <\/p>\n\n\n\n

But it would be remiss to ignore the speed at which a solution was found – particularly in the UK. This underlines the hard-won recognition of technology\u2019s value and influence as a sector, its effectiveness at lobbying in moments that matter and how those in positions of power will battle to protect the interests of a sector now seen as central to the UK\u2019s economic success.<\/p>\n\n\n\n

Many tech firms took swift action to reassure customers. Others focused on adding their names to the advocacy efforts aimed at getting the government to act quickly. In the end, HSBC, UK tech and the government managed to move fast and fix things. The sheer scale of SVB\u2019s presence across the tech ecosystem meant that no single company felt the glare of scrutiny alone – this was a collective challenge that was met with collective action. <\/p>\n\n\n\n

Behind the scenes, founders and their backers were able to voice concerns at the very top of government and at key institutions like the Bank of England, spending the weekend signing letters, calling ministers and officials, or advocating through the media.<\/p>\n\n\n\n

Now the dust has settled on the dramatic events of last week, thoughts will turn to the longer term impact of SVB\u2019s demise. It\u2019s unclear how the multiple roles the bank played – as a financial partner which opened its doors to early stage propositions but also a core institution and trusted broker at the centre of a complex ecosystem – will be replicated. <\/p>\n\n\n\n

Ministers and opposition alike regularly trumpet their desire for the UK to compete as a tech and science superpower. The government machine showed its ability to act quickly and decisively in support of the sector, but big questions remain on its ability to act in such a joined-up way outside moments of crisis and on whether other centrally-led initiatives will be able to step into the roles vacated by SVB. Some start-ups were left disappointed by this week\u2019s Budget, which only partly rowed back on cuts to R&D tax credits – a particular concern for fast-growing businesses in verticals such as biotech.<\/p>\n\n\n\n

Given the volume of deposits which remain in the HSBC-owned entity, we\u2019re yet to see how its operational structure and culture will evolve. Often, large financial institutions have been viewed with suspicion by start ups – as exemplified by the reaction to the news that Barclays had won Tech Nation\u2019s government funding. As the ecosystem adapts to its new arrangements, we\u2019ll also see founders and startups – shaken by the events of last week – quickly change their approach to treasury management. There\u2019s a big opportunity here for other players in the financial system.

There are important questions about what the next iteration of SVB will look like. Will continuity in leadership translate to continuity in strategy? What – if any – reputational risk does banking with SVB, or HSBC, pose for current and future start-ups, when seeking to build credibility with their own customers and supply-chain? Is this an opportunity for other investment banks to encroach on the space as alternative providers? Might we even see a change of approach from SVB, in terms of how it positions itself, as it seeks to rebuild its reputation as a trusted bank for the start-ups of tomorrow? <\/p>\n\n\n\n

While the full ramifications of last weekend are yet to be felt, this is a moment for the tech ecosystem to breathe a sigh of relief, take stock and look forward. Careful financial planning and diversification of funds might be the immediate actions taken by UK tech. But this is also an opportunity to reevaluate operations more broadly, from crisis management planning to customer and investor comms, and ensure better readiness should anything like this happen again. <\/p>\n","protected":false},"excerpt":{"rendered":"

After the collapse of Silicon Valley Bank, what next for tech? After a bruising winter for many tech firms, the collapse of SVB last weekend was a further shock to the system. 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