What Silicon Valley Bank’s collapse means for climate tech

Here’s the key points from this CNBC article:

– Silicon Valley Bank was the go-to bank for startups looking to talk to bankers who understood the startup life and balance sheets, including for climate tech startups.
– Specifically, Silicon Valley Bank has been the “1,000-pound gorilla in the room” of providing venture debt to startups, which means lending to startups that are still raising money from investors.
– But since SVB started, the climate space has grown up, and there are going to be lots of financiers looking to serve the climate community going forward simply because it’s good business, participants in the space believe.

Here’s a note from Bloomberg Green on the topic:

As the buoyancy drained out of the tech sector last year, leading to almost 100,000 job cuts in the US, cleantech looked like a bright spot. Investors pumped some $59 billion into climate technology companies in 2022, more than the year before, across 1,182 deals tracked by researchers at BloombergNEF.

The collapse of Silicon Valley Bank, on which the dust is just settling after a white-knuckle weekend, is throwing a wrench into that outlook. It’s the first major headwind to blow against a boom in climate-tech investing that was capped off by incentives in the US Inflation Reduction Act last year. SVB was known as a climate bank — one that lent big to renewable energy companies, specialized in small solar projects and by its own accounting served more than 1,550 customers doing climate and sustainability work.

Clean-energy developers with smaller projects received a welcome reception from SVB that they didn’t get at Manhattan-based giants like Morgan Stanley and JPMorgan Chase & Co., said Pol Lezcano, BloombergNEF’s lead US solar analyst. “Silicon Valley Bank was more than happy to pick up the tab for portfolios that were less than 100 megawatts,” said Lezcano.

That is, until the bank went into receivership on Friday and set off a feverish few days in which startups wondered how they’d make payroll, VCs worked to shore up support and regulators moved in to contain the damage. On Sunday, US regulators said they would guarantee all SVB deposits. The bank sent out a notice to its depositors on Monday, informing them that domestic transactions could resume. International payment services remain suspended.

Silicon Valley Bank developed an outsized importance in the world of Northern California startups because it was willing to work with young companies pursuing outlandish ideas. “Most banks, they’re banking against assets or cash flow,” said Tom Steyer, co-founder of the Galvanize Climate Solutions investment firm and a former Democratic presidential candidate. “When you think about a startup, which has a good chance of having neither, you understand why many banks shy away. They chose to understand and work with startups.”