The collapse of Silicon Valley Bank (SVB) has left Black founders and investors with new worries about their future in the financial section, NBC News reports.
On Wednesday (March 15), members of Atlanta's Black business community convened via Zoom to “determine a path forward to fill the gap in the ecosystem [left] from SVB,” Joey Womack, a co-founder of Black Tech, said following the collapse. During the meeting, many noted that SVB's "warm embrace" of the regional Black business scene would be missed as the bank had previously offered local entrepreneurs discounted tech tools, valuable introductions, and research funding.
Barbara Jones-Brown, a member of the Atlanta business community, said her credit card declined while she was with a prospective client last week when SVB collapsed. The card was tied to her SVB business account, which she opened last year at the insistence of one of her investors. Jones-Brown was told it would be easier to manage and allocate her business' money through the bank.
But now that SVB is under federally appointed management and seeking a buyer, Jones-Brown is worried that there will be a broader industry pullback.
“I’m very nervous that I will not be able to raise the money I need to keep my company going,” Jones-Brown said, “and it’s so scary after the beautiful, amazing year we had last year.”
Venture capital funding dropped by 45 percent for Black founders last year, marking the biggest annual decrease for the group in over a decade, according to data from Crunchbase.
“When our economy catches a cold, the Black community catches the flu,” said Kelly Burton, the CEO of the Black Innovation Alliance. “There will likely be retrenchment in the space with investors becoming more skittish. That can’t be good for Black founders, especially [considering] there’s all this conservative blowback."
Sherrell Dorsey, the founder of the Black tech-focused research firm The Plug, said Monday (March 13) that SVB's collapse “will mean a drop in support for the Black tech ecosystem at large,” noting that the bank would be "sorely missed" given that it funded initiatives such as the State of Black Venture Report, startup competitions, and Black founder brunches.
“They were a force in helping to create space for Black innovation to be conducted and were truly a partner within the ecosystem,” Dorsey said.
The Black Information Network is your source for Black News! Get the latest news 24/7 on The Black Information Network. Listen now on the iHeartRadio app or click HERE to tune in live.