Many “Climate Tech” Start Ups Had Accounts With Failed SVB

Consequently, a lot of the companies centered on climate change and biotech that did business with Silicon Valley Bank will have to search for financial supporters willing to accept the risk.

The collapse of Silicon Valley Bank has created new challenges not just for the nation’s banking system, but also for the Biden administration’s climate agenda, following a harrowing weekend in which many major clean tech companies faced insolvency.

Although the federal government has stepped in to enable investors and company founders to access their funds, the episode has left them to navigate a more challenging and uncertain landscape. Some worry it will lead to more investor caution in this sector dominated by cash-starved, pioneering start-ups, slowing clean energy innovation at the same time the administration is focused on implementing the Inflation Reduction Act, the historic climate package signed by President Biden last summer.

“It feels like we just avoided the apocalypse,” said Jim Kapsis, a former adviser at the Treasury Department and the founder of the Ad Hoc Group, where he has advised dozens of climate tech start-ups. “I think everyone is going to press the pause button for a period of time to see how the macro environment shakes out. A lot of firms just had an existential, out-of-body experience that could have ended in a massive death of their start-up portfolio.”

Clean tech firms and venture capital funds are assessing how to move forward following what for some of them was the most challenging week in their existence. About half the start-ups working to develop and scale up the newest clean energy technologies were banking with the failed institution, investors and analyst say. Some had just closed new funding rounds days before the collapse and were locked out of the accounts where the millions of dollars in investment was deposited.

Last week, The Wall Street Journal reported that climate tech sector start ups loved doing business with SVB since it provided banking services to startups that often weren’t profitable, in some cases didn’t have a product, and would otherwise have a hard time getting a line of credit or a loan from a larger bank.

The illusion of permanent near-zero interest rates, erroneous regulation, Biden’s massive amounts of subsidies directed to so-called clean energy alternatives, including SVB;s woke corporate culture, set up the perfect storm for the bank’s demise. It was just a matter of time before Silicon Valley Bank crashed and the shock waves would affect the rest of the banking sector. This also demonstrates not only that green tech ideas aren’t just financially bankrupt, but morally bankrupt since their basis is grounded in idealism and not reality.


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