Israeli Startups In Trouble After Bank Collapse
Israeli startups and companies will lose value and face steep competition for funding after the collapse of the Silicon Valley Bank (SVB) on Friday.
A combination of high interest rates, high borrowing costs, and lack of venture capital, resulted in the largest bank failure since the 2008 financial crisis.
The Israeli branch of the bank closed today, with approximately 40 employees ceasing work, according to Israeli news channel N12.
A handful of employees will stay on for up to 45 days, possibly to help ensure the smooth transfer for the bank, should it be sold.
The SVB provided financing for tech startups worldwide, including many Israeli startups, and had $209 billion in total assets at the end of 2022. Several Israeli companies have already released statements on the matter.
QualiTau, which specializes in semiconductor testing, said it held $16.8 million of its total funds of $22.3 million at SVB, and that most of it is not federally insured.
It said it had no information about the sums of money that will be possible to withdraw in the future out of the cash balances deposited, or about when it will become possible to withdraw this money.
Other companies reported only small amounts of capital deposited at the bank. Compugen, a computerized drug design company, said less than two percent of its cash had been deposited at SVB.
Outbrain, a web content recommendation company, said that less than five percent of its investments and cash was held by SVB.
“If necessary, out of responsibility to Israeli high-tech companies and employees, we will take steps to assist the Israeli companies, whose center of activity is in Israel, to weather the cash-flow crisis that has been created for them due to the turmoil,” said Israeli Prime Minister Benjamin Netanyahu in a tweet.