Silicon Valley Bank It entered into exclusivity clauses with some customers, limiting their ability to obtain banking services from other financial institutions, SEC filings show.
The agreements that made it impossible for those customers to safely diversify where they store their money varied in language and scope. confirmed. Any business was required to open or maintain a bank account in SVB and use her SVB for all or most of their banking services.
Those arrangements are particularly problematic now that SVB has been seized by federal regulators after last week’s crackdown on banks. Because the Federal Deposit Insurance Corporation only guarantees deposits of up to $250,000 to each customer, SVB’s customer base is concentrated in high-tech startups, leaving millions of dollars under management locked indefinitely. I’m afraid not.
Banking regulators on Sunday devised a plan to help depositors at the SVB in an attempt to stave off the panic feared across the industry after the second-biggest bank failure in US history.
In this photo illustration, the Upstart Holdings logo is displayed on a smartphone screen.
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As part of a multi-million dollar fundraising agreement online lending platform Upstart Holdings, The SVB required that the company maintain all “management and other deposit accounts, cash collateral accounts, securities/investment accounts” with the SVB.
The contract provided for certain allowances for accounts at other banks, but set strict limits on their size.
In a statement to CNBC, Upstart said, “We have had no exclusivity obligations for many years and hold more than 90% of our cash in the top five banks in the United States.
cloud software vendor docusign had a monopoly contract The SVB indicates that an e-signature company is required to hold its “primary” savings, operational and brokerage accounts with a bank. The agreement was part of a senior collateral line of credit entered into between DocuSign and SVB in May 2015. DocuSign is wells fargo.
Upstart held its IPO in 2020, two years after DocuSign’s debut.
SVB provided multi-million dollar loans sprout social, went public in 2019. The bank required the social media management software company to maintain all of its “primary operational and other deposit accounts, cash collateral accounts, and securities/investment accounts” at SVB.
Like Upstart, SVB has set hard limits on the value and types of accounts Sprout can hold elsewhere.
another Loans and Security Agreements Limelight Networks and Eziothe SVB required that the company likewise maintain all “operating accounts, deposit accounts and surplus cash with banks and bank affiliates.”
The agreement included an exception for international bank accounts, but Limelight was required to use only SVB’s business credit cards.
Founded 40 years ago, SVB has grown to become the 16th largest bank in the United States by assets, and has become a leading venture debt provider, supporting early-stage companies and providing startups with access to financial resources that most traditional banks cannot afford. We offer a wide variety of liquidity.
SVB did not immediately respond to a request for comment.
Dexcom signed Loans and Security Agreements It requires manufacturers of products for managing diabetes to maintain bank accounts and transfer cash held elsewhere within 90 days of the contract.
Dexcom’s deal with SVB also required the company to open a lockbox and maintain a “majority” of the company’s brokerage accounts with banks.
SVB also had a monopoly in the healthtech market. contract Partnered with Hyperion Therapeutics, a pharmaceutical company acquired by Horizon Pharma for $1.1 billion in 2015.
Hyperion needed to bank exclusively in SVB, but specifically didn’t want the company to manage accounts used for “salaries, payroll taxes, and other employee wages and benefits payments.” .
Representatives for DocuSign, Sprout Social, Edgio, Dexcom and Horizon did not immediately respond to requests for comment.
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