More than 190 companies worldwide have been affected by the bankruptcy of Silicon Valley Bank (SVB). These include RingCentral, Sumo Logic, Juniper Networks, Lantronix, SentinelOne, and CrowdStrike. The impact of the problems appears to be limited.
SVB has recently been in trouble after interest rates rose. SVB took out loans when interest rates were still low. However, interest rates have risen rapidly in recent times. The company therefore had problems refinancing these loans. It previously issued new shares in the hopes of raising new money from investors. However, the step actually led to unrest; customers decided to withdraw their money from the bank.
The resulting bank run led to customers attempting to withdraw $42 billion from SVB accounts. The US government intervened and appointed the US Federal Deposit Insurance Corporation (FDIC) as administrator. The FDIC focuses on monitoring stability in the US economy. It is comparable to the European deposit scheme. The service guarantees credits of up to $250,000 per customer.
About 190 companies affected
The bankruptcy affects a wide range of companies worldwide. Bloomberg news agency reports that an estimated 190 companies have to look for a new financier. CRN made an analysis of various affected companies. These include RingCentral, Sumo Logic, Juniper Networks, Lantronix, SentinelOne and CrowdStrike. For example, SVB was part of a loan that was granted to RingCentral earlier this year. A spokesperson reports to CRN that RingCentral has deposited a minimum amount of cash with SVB. The spokesperson does not expect any problems.
Versa Networks raised $120 million from investors in October, with SVB also investing in the company.
Sumo Logic estimates that approximately 1.5 percent of its financial assets are held by SVB. However, the company emphasizes that the vast majority of its financial resources are deposited with other banks.
CrowdStrike closed a $750 million loan with SVB in January 2021. CrowdStrike says in a statement on its website that it does not expect to need this money.
Also consider Juniper Networks, which has filed a document with the US Securities and Exchange Commission (SEC) showing that 1% of its financial assets are held with SVB. It expects the impact on the business to be “immaterial.”
At the time of SVB’s bankruptcy, Lantronix had placed an estimated $6.7 million with the bank. This amounts to about 85% of the company’s total outstanding deposits. Lantronix expected to be able to access this money again at the beginning of this week. It is unknown whether this was successful. As a contingency plan, Lantronix had commitments from managers and board members, among others, to borrow up to $ 5 million to cushion the blow.
Another example is SentinelOne, which states in an e-mail to customers that a ‘minimum amount of cash’ has been placed with SVB. However, the vast majority of the $1 billion in funds SentinelOne owns would be with other banks.
CrowdStrike has $750 million in credit from SVB. However, the company reports that it has not used this credit and does not expect to do so in the future.
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