Erik Nieves, the CEO of San Antonio parcel-packaging robotics company Plus One Robotics, said early stage tech startups are likely to lose much of their access to financial services after the failure of Silicon Valley Bank in California.
He said that’s because SVB was the chosen home for many tech startups due to its flexibility and willingness to lend to startups that lacked significant assets or capital. With SVB gone, he said there’s not many other places for these startups to go that will offer the same kind of flexibility.
“Can you imagine going to your local bank here in San Antonio and saying: ‘Yep, I’m a startup, I don’t have a lot of money, I don’t have a product, I don’t really have any customers, but I would like a loan,’” Nieves asked. “How far is that conversation going to go?”
Despite ripple effects being felt in the stock value of mid-size banks around the country — including Frost Bank in San Antonio — and the federal takeover of Signature Bank in New York over the weekend, Nieves said he’s confident in the national banking system.
Last night we had an emergency Zoom call with most of Congress to stop a bank run.
— Rep. Jeff Jackson (@JeffJacksonNC) March 13, 2023
Here’s the situation: pic.twitter.com/wiplqp9PsS
“[SVB is] one of a kind,” he said. “They are a bank specifically targeted at venture-backed startups. No other bank has that kind of exposure, so no, I don’t believe SVB is indicative of what is to come.”
Nieves said Plus One Robotics had funds with SVB that had been frozen when the bank failed, but that as of Monday, the company’s operations are essentially back to normal. Nieves said his company has reached a certain maturity, so he doesn’t consider them to be at risk of losing access to capital or other financial services, even with SVB's closure.
But he said there is a particular type of early stage tech startup that is going to feel the most pain without the backing of SVB unless another bank steps in to fill the gap.
“The ones that are going to struggle are the ones that are coming up with the next gadgets, right?” Nieves said. “That we don’t know we need it, or we actually don’t need it, but it has novelty. Those are the ones that are really going to struggle now because in a world of have-to versus want-to, have-to always wins.”
