Startup founder Pariss Chandler saw a familiar series of events unfold on Friday when she woke up to the news that major startup banker Silicon Valley Bank (SVB) had collapsed.
Chandler, the founder, CEO and sole employee of Boston-based recruiting platform Black Tech Pipeline, is an unfortunate veteran of financial convulsions such as this, having already weathered the closure of boutique banking company, Azlo, in 2021.
Now, Chandler is one of the thousands of SVB customers left scrambling after federal regulators abruptly took control of the Santa Clara-based bank Friday morning. She says she’s been met with near radio silence from SVB, and is uncertain about the financial future of her company.
“I have a subscription-based service, which is auto-renewable. If someone's subscription auto-renews today, it would go to my bank—but I don’t know what happens now,” Chandler said of her company. Black Tech Pipeline is a job board, newsletter and recruitment platform for Black technologists and professionals interested in career-changing opportunities.
Recent uncertainty and mass layoffs in the tech industry have been partially blamed for the collapse of the major startup banker.
Chandler's problems today are just the tip of the iceberg: As thousands of SVB customers struggle to keep operations running while navigating frozen bank accounts, experts warn that smaller startups and businesses like Chandler's will be the biggest victims of SVB’s spectacular collapse.
‘A Lot of Uncertainty’
For small businesses like Black Tech Pipeline, SVB’s industry collapse means a logistical nightmare for founders. Companies may not be able to pay employees if funds stay frozen and the FDIC lags in doling out insurance deposits; but for Chandler, losing access to her accounts complicates her entire business’s operations.
Chandler has been locked out of her SVB account since Thursday, and she says the normally responsive company left her on hold numerous times. The bank’s closure means that she’s unsure if her customer deposits or recently secured grants can go through to her account, potentially jeopardizing the relationships she built between her business and her community.
“There's a lot of uncertainty, and I'm very scared to lose money,” Chandler said. “This is going to be the second bank that I've been with since I started Black Tech Pipeline in 2020, that has now closed down. I'm yet again needing to find another bank, but I'm thinking of just choosing a big bank at this point.”
Chandler says her company’s deposits were below the FDIC’s $250,000 insurance deposit limit, indicating that Black Tech Pipeline could potentially shore up its frozen funds once the federal agency starts doling out deposits.
When small business bank Azlo folded in 2021, Chandler scrambled to withdraw her money from the boutique firm while continuing to manage manual payments from her company’s subscription service. Now, she fears she’ll have to do the same.
“I don't really work with anyone else, so I'm already running day to day tasks,” Chandler said. “Also needing to manually take care of payments is just like another hassle for me. The process is annoying, and I just don’t understand banking—there's just so many things I can't keep up with.”
Chandler's company is not backed by venture capital, and she says she was not warned to withdraw her funds from SVB earlier this week. As big-name investors like Peter Thiel and other venture capitalists warned companies to pull away from SVB on Wednesday and Thursday, these investors started a domino effect that saw numerous VC-backed startups yanking cash from SVB accounts.
The real victims of the SVB fallout are the depositors:
— Garry Tan (@garrytan) March 10, 2023
startups (10 to 100 employees) who cannot make payroll, and will have to shut down or furlough *next week*
If these startups wait weeks/months for their deposits, we have destroyed a generation of US startups, *at random* https://t.co/mLRQzag1VI
This is the second biggest bank to fail in U.S. history, and the biggest bank failure since the 2008 financial crisis.
Chandler is disappointed to be losing a trusted business partner in SVB.
“It’s unfortunate, but I really do love—well, I guess ‘loved’—SVB,” Chandler said. “I had personal relationships with the people there, and I loved that they got to know the people who are using their services. This is all very unfortunate, but it is what it is. You have to move on from it.”