Half of the companies in the U.S. devoted to climate change and biotech banked with the now-failed Silicon Valley Bank (SVB), leaving many of those companies looking for financial backers willing to take on the risk.
As San Francisco Bay Area public radio station KQED reports, many of those companies received funding from SVB because other banks were less willing to fund investments that had lower chances of providing a return:
Nearly half of the country’s bio- and climate-technology companies, many of them headquartered in the Bay Area, banked with Silicon Valley Bank. Last year, SVB committed to investing at least $5 billion in the clean tech industry.
But even as the FDIC quickly stepped in to guarantee deposits, following the bank’s collapse, many companies have been scrambling to find new banks, open accounts and reorganize payroll systems.
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To his point, SVB was widely known for incubating ambitious climate and biotech startups, and was a valuable resource for new companies looking for a bank willing to invest in innovative and somewhat risky ventures.
Kimberley Strassel, a columnist for the Wall Street Journal, quoted one source who called such investments “subprime business loans”:
Most of these companies weren’t filling some vital market need. Rather, as the Journal reported, SVB was beloved for its willingness to offer “banking services to startups that often weren’t profitable, in some cases didn’t have a product, and would otherwise have a hard time getting a line of credit or a loan from a larger bank.” One tech entrepreneur provided law.com a more scathing description of SVB’s products: “They’re basically subprime business loans. You’re talking about companies that have no credit profile, they’re burning cash and are unlikely to raise the same type of capital because of interest rates. . . . It was basically social credit.”
What inspires a bank to disregard risk and shower money on products or services that nobody is clamoring to buy? One answer is easy money and misguided regulation, which washed dollars into the economy even as it pushed banks like SVB to load up on sovereign debt, lulled by a Federal Reserve-fed belief that interest rates would stay near zero forever. The other? Washington handouts, via President Biden’s effort to engineer a climate industry that otherwise wouldn’t exist.
She argues that the same Democrat-led government that funded failed enterprises like Solyndra in the 2009 “stimulus” — managed by then Vice President Joe Biden — is making the same mistake again.
As Breitbart News noted in 2020, Biden took personal credit in 2009 for an investment by Fisker Automotive in Delaware, backed by the stimulus, to produce electric cars. The venture failed without one car being produced.
Joel B. Pollak is Senior Editor-at-Large at Breitbart News and the host of Breitbart News Sunday on Sirius XM Patriot on Sunday evenings from 7 p.m. to 10 p.m. ET (4 p.m. to 7 p.m. PT). He is the author of the new biography, Rhoda: ‘Comrade Kadalie, You Are Out of Order’. He is also the author of the recent e-book, Neither Free nor Fair: The 2020 U.S. Presidential Election. He is a winner of the 2018 Robert Novak Journalism Alumni Fellowship. Follow him on Twitter at @joelpollak.
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