A host of medtech companies dodged the loss of billions of dollars in Silicon Valley Bank deposits — but the space still faces challenges.
That is one of the big takeaways from the latest DeviceTalks Weekly podcast.
The FDIC shuttered Silicon Valley Bank on March 10 to stave off a bank run amid depositor concerns over how the bank had managed risk around rising interest rates. With $209.0 billion in total assets and about $175.4 billion in total deposits, it was the second-largest bank collapse in U.S. history.
Silicon Valley Bank was a huge name in the tech and startup world since its founding in the 1990s. SVB’s website said half of all U.S. VC-backed tech and life science companies used the Santa Clara, California–based bank. Especially vulnerable were startups and other young companies that parked their funds at the bank — and found themselves asking how much they’d get back above the $250,000 FDIC deposit insurance limit.
By Sunday, March 12, U.S. banking regulators announced plans to ensure depositors had access to all their funds by the next day. Fast forward a week later, and the FDIC continues to take bids for SVB’s successor Silicon Valley Bridge Bank. The bank’s former parent company has filed for Chapter 11 bankruptcy protection. Meanwhile, stock markets are still jittery over the banking space.
Bryan Lord, CEO of endoscopy tech company Pristine Surgical, was understandably relieved to rescue the company’s deposits. But he also told DeviceTalks editorial director Tom Salemi that Pristine Surgical and many other medtech and tech companies have lost an important partner. Lord noted that the bank failed not because there wasn’t demand for its services and the niche it carved out and dominated — but because of risk management and execution.
“If there is a hole left, there will be a giant loss for the industry. … We will see the loss of a catalyst and see what that is like unless the hole isn’t filled without another tailored, enterprising, innovation-centric financial player,” Lord said. (On another note, Lord shared a 10-point plan on LinkedIn with useful lessons after the SVB collapse.)
Medtech Innovator CEO Paul Grand echoed Lord’s stories of a stressful initial weekend after the SVB collapse. Now Grand is concerned about the aftershocks for medtech startups and early-stage companies — and young companies in general. “It’s hard to raise funding, and anything that makes it less confident for people is not a good thing.”
Joe Mullings, CEO of the Mullings Group search firm, says medtech faces uncertainty over the next 90 days as the fallout from SVB’s collapse — including the loss of an important partner — takes up venture capital firms’ attention.
Listen to the full DeviceTalks Weekly podcast here: