Silicon Valley bank collapse was ‘Lehman moment’ for tech industry, says top goldman sachs deal maker.
Cliff Marriott, co-head of European technology, media and telecoms at Goldman Sachs investment banking unit, said SVB’s March 10 closure was “quite stressful.” .
“That first weekend was a bit like Lehman’s moment on tech, actually more functional for those companies,” Marriott told CNBC’s Arjun Kharpal.
“They needed access to capital. A lot of their balance was in SVB. And secondly, SVB was driving and making a lot of payments to pay their employees. .”
Founded in 1983, SVB was seen as a reliable source of funding for technology start-ups and venture capital firms. The California-based commercial lender, a subsidiary of SVB Financial Group, was at one point his 16th largest bank in the United States and the largest bank in Silicon Valley by deposits.
SVB was acquired by the US government after venture capitalists and tech startup clients withdrew billions of dollars from their accounts. Many VCs were advising investee companies to withdraw money due to concerns that lenders would collapse.
SVB Financial Group’s holdings — assets deemed safe, such as US Treasury bills and government-backed mortgage securities — have been hit by aggressive Fed rate hikes, and their values have fallen dramatically. .
Earlier this month, the company said it had sold $21 billion worth of securities for a loss of about $1.8 billion, and had raised $2.25 billion to meet client withdrawal needs and fund new loans. said it needed to raise $10,000.
The deposit was eventually withheld by the government and SVB’s government-appointed CEO has tried to reassure customers that the bank remains open, but SVB’s future remains uncertain.
According to Marriott, “any bank, corporation, or set of corporations is the SVB in terms of providing utility-like services for technology, providing bank accounts, enabling payroll, and holding bank accounts. There is still a big question mark as to whether it will replace . cash balance. ”
The SVB collapse also raises questions about the potential impact on other banks. Swiss investment banking giant Credit Suisse was bailed out by his main rival UBS last week in a government-backed markdown deal.
Marriott also mentioned its technology IPO and its 2023 outlook. The European tech IPO market is mostly closed due to a combination of market pressures such as rising interest rates that make the future cash flows of high-growth tech companies less attractive.
Marriott said two weeks ago it would have been more optimistic about the rebound in tech IPO activity.
“I still hope to see tech IPO activity in 2023. If not, I think 2024 will be a big year for tech IPOs,” Marriott said.
“Before we look at the highly valued or negatively profitable companies that we have seen in 2021, the more established profitable companies will come first to understand the business model, the profitable companies. It will be easier.”
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