Opinion by Steve Case: At a moment when America’s lead in the global race for innovation is at risk of shrinking — China’s top-down system is gaining steam on our bottom-up approach — we can’t let SVB’s unique role supporting new companies go unfilled.
Silicon Valley Bank’s collapse has, so far, served primarily to raise questions about banking regulations and macroeconomics. But at a moment when America’s lead in the global race for innovation is at risk of shrinking — China’s top-down system is gaining steam on our bottom-up approach — we can’t let SVB’s unique role supporting new companies go unfilled. There is real danger that we let the focus on SVB’s collapse obscure the critical role it played for start-ups and entrepreneurs.
SVB wasn’t exclusive to Silicon Valley — it had branches in Georgia, Illinois, Pennsylvania, Arizona and nearly a dozen other states — and it banked not just tech companies, but nearly half of the nation’s start-ups. In its core banking business, SVB’s Some may argue that tomorrow’s founders should just do what other small businesses do when they need a loan — apply to a traditional bank. But national and midsize banks often don’t understand the unique business model of a start-up and tend to require collateral ahead of approving a borrower. SVB often stepped in when a business had a good idea and good backing. U.S. entrepreneurs cannot drive the economy forward if they’re not able to finance their endeavors.
For the time being, venture firms like ours should return some capital to SVB, demonstrating our support for continued access to capital for young start-ups that have limited options. Beyond that, we need to acknowledge the validity of public concerns that our industry is less interested in widespread prosperity than our own interests. That means doing the hard work of making real investments in entrepreneurs outside of California, New York City and Massachusetts.
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