SVB Meltdown: What It Means for Cybersecurity Startups’ Access to Capital

Last week’s stunning collapse of Silicon Valley Bank (SVB) could put a damper on the ability of venture-backed cybersecurity startups to secure vital capital for operations and strategic investments.

Security experts perceive that even the US government’s swift move over the weekend to protect SVB customer deposits will likely do little to tamp down the uncertainty that the bank’s sudden exit has caused.

Younger Startups Will Feel the Brunt

“Financial support in the form of lines of credit and venture debt is going to become much more difficult [for startups] to come by,” says Rob Ackerman, founder and managing director of AllegisCyber Capital. “SVB was the leading source of that financing and with them gone, the slope of the hill for young startups just became that much more difficult.”

SVB was, until the middle of last week, the 16th largest bank in the US with assets of more than $200 billion and total deposits of some $175 billion. Its troubles began March 8 when the bank, in a midquarter update, announced that it had lost $1.8 billion from the sale of US treasuries and mortgage-backed securities that it had purchased heavily in recent years. On the same day, SVB announced plans to raise $2.25 billion via public offering to pay customers seeking to withdraw their deposits from the bank.

The news triggered a near immediate run on the institution, as spooked investors and customers withdrew a staggering $42 billion from the bank in a 24-hour period —

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