German founder on Silicon Valley bank closure: “It’s surreal”

A month ago, the young startup Codesphere from Karlsruhe launched a new multi-million dollar announce a round of financing. This Saturday, March 11, there will be an update from founder Elias Groll via Whatsapp: “We have a lot of money on the Silicon Valley Bank”. no hello only that

The problem: Last night it was announced that the American Silicon Valley Bank closed becomes – and thus one of the largest and best-known start-up financiers in the world.

The collapse of the Silicon Valley Bank, SVB for short, lasted less than two days. The bank issued a press release on Wednesday, March 8th of its capital requirement of $2.25 billion reported by the issue of new shares should be covered.

Investors like Peter Thiel reacted with alarm and advised their portfolio companies to withdraw their funds as soon as possible.

SVB shares collapsed. The required capital could not be raised and an emergency sale also failed. The closure of the bank was announced on Friday. An exceptional situation for startups like Codesphere.

“It’s surreal,” says Elias Groll in the video call with t3n on March 11. “Fortunately, we acted very quickly.”

The software company Codesphere, founded in 2020, has so far raised around seven million euros in venture capital. Their target: tech giants like Outperforming Google and Microsoft. Codespheres The platform allows developers and teams to program and scale web apps directly in the cloud without first having to create a separate development environment.

Meanwhile, Groll can no longer access his accounts with the SVB. According to the FDIC, the insolvency administrator of Silicon Valley Bank, this should be possible again on Monday, March 13. Much more is not known so far. Only that in the USA, deposits of up to 250,000 US dollars are secured – which of course is not necessarily reassuring for many startups, some of whom have millions in the bank.

On Thursday, March 9, Groll and his team received the warning to keep an eye on their SVB accounts from their investors via WhatsApp. That was at 8:17 p.m., just a few hours before the actual bad news of the official bank closure.

Seven minutes after the warning, resentment prompted the transfer of millions from SVB to Deutsche Bank. At the same time, Heidi Klum’s “Germany’s Next Top Model” ran, which Groll, according to his own report, watched with his girlfriend.

Codesphere has SVB accounts in the US and UK. “The booking was made from the British account, that worked,” says Groll. “Even with the US account, the posting was initiated at the last minute.” Immediate transfers are generally not possible with the SVB.

But resentment feels safe. “We fall softly and our investors have our backs. But I’m worried about many US companies that may find themselves in trouble because they can no longer pay salaries.” In addition, many large US funds also have their money in the SVB, which could subsequently become dangerous for many startups.

Groll has a few to-dos on his list for the next week, he says, including reporting to the FDIC, the SVB’s insolvency administrator. And the opening of new bank accounts.

“We’ll probably go to JP Morgan Chase and Citibank,” says Groll. “We simply googled: ‘Which are the most stable banks’ and got references from our network. These appear to be safe.”