For decades, Silicon Valley Bank has been a critical financing partner to the startup and venture capital ecosystem. In the past two weeks, fintech startups have stepped up and tried to fill in the void left by the recent collapse of Silicon Valley Bank.
San Francisco-based banking startup Mercury said it has added more than $2 billion in deposits and thousands of new customers. It is offering customers expanded FDIC insurance of up to $6 million via a new product in the wake of Silicon Valley Bank’s collapse. New York-based treasury management startup Meow, which helps companies invest their cash in Treasuries, has seen hundreds of millions of inbound demand and has now crossed $1 billion in assets.
San Francisco-based corporate card startup Brex, which offers a business banking account, added over 3,000 new customers and reportedly took in billions in new deposits. It also extended loans to former Silicon Valley Bank customers to help them meet payroll. Like Mercury, it also offers FDIC insurance up to $6 million. San Francisco-based Arc, which lets software companies sell their future revenue streams in exchange for upfront cash, had seen 500 startups apply for more than $150 million in payroll financing in the wake of the SVB collapse. It launched Arc Gold, automated treasury management for startups to diversify and strengthen their financial position.
New York-based banking startup Rho has also seen a surge of new customers. Its Treasury Management Account is built on a network of over 400 FDIC-insured banks, allowing customers to access up to $75 million in FDIC deposits. Payroll provider Rippling raised $500 million in emergency financing following the collapse of its primary banking partner SVB and extended $130 million of its own capital to fund customer payments to their employees.
The collapse of Silicon Valley Bank and the continued troubles at other banks has sparked discussions around banking regulations, treasury management, and monetary policies. While that happens, we should not overlook the significant role SVB played in building relationships throughout the innovation ecosystem, understanding startups, and supporting entrepreneurs. While the fintech startups have quickly adapted and helped companies, a void in the financing stack now needs to be filled.
Important Disclosures
This material has been distributed solely for informational and educational purposes only and is not a solicitation or an offer to buy any security or to participate in any trading strategy. All material presented is compiled from sources believed to be reliable, but accuracy, adequacy, or completeness cannot be guaranteed, and Contrary LLC (Contrary LLC, together with its affiliates, “Contrary”) makes no representation as to its accuracy, adequacy, or completeness.
The information herein is based on Contrary beliefs, as well as certain assumptions regarding future events based on information available to Contrary on a formal and informal basis as of the date of this publication. The material may include projections or other forward-looking statements regarding future events, targets or expectations. Past performance of a company is no guarantee of future results. There is no guarantee that any opinions, forecasts, projections, risk assumptions, or commentary discussed herein will be realized. Actual experience may not reflect all of these opinions, forecasts, projections, risk assumptions, or commentary.
Contrary shall have no responsibility for: (i) determining that any opinions, forecasts, projections, risk assumptions, or commentary discussed herein is suitable for any particular reader; (ii) monitoring whether any opinions, forecasts, projections, risk assumptions, or commentary discussed herein continues to be suitable for any reader; or (iii) tailoring any opinions, forecasts, projections, risk assumptions, or commentary discussed herein to any particular reader’s objectives, guidelines, or restrictions. Receipt of this material does not, by itself, imply that Contrary has an advisory agreement, oral or otherwise, with any reader.
Contrary is registered with the Securities and Exchange Commission as an investment adviser under the Investment Advisers Act of 1940. The registration of Contrary in no way implies a certain level of skill or expertise or that the SEC has endorsed Contrary. Investment decisions for Contrary clients are made by Contrary. Please note that, although Contrary manages assets on behalf of Contrary clients, Contrary clients may take any position (whether positive or negative) with respect to the company described in this material. The information provided in this material does not represent any investment strategy that Contrary manages on behalf of, or recommends to, its clients.
Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, company or product made reference to directly or indirectly in this material, will be profitable, equal any corresponding indicated performance level(s), or be suitable for your portfolio. Due to rapidly changing market conditions and the complexity of investment decisions, supplemental information and other sources may be required to make informed investment decisions based on your individual investment objectives and suitability specifications. All expressions of opinions are subject to change without notice. Investors should seek financial advice regarding the appropriateness of investing in any security of the company discussed in this presentation.
Please see www.contrary.com/legal for additional important information.
