UK tech firms are pouring cash into Revolut, Wise and other London fintechs after scrambling to withdraw funds from Silicon Valley Bank amid fears they may lose access to their deposits, the Standard has learned.
Revolut said inbound volumes from Silicon Valley Bank were a staggering 16.6 times higher than normal yesterday, while today’s transfers could be higher still.
Silicon Valley Bank was yesterday closed by California regulators after tech firms raced to pull cash from the business. Earlier this morning, the Bank of England said it would apply to place SVB’s UK unit into a Bank Insolvency Procedure and the firm will stop making payments or accepting deposits.
Fred Destin, founder of London-based venture capital firm Stride, said a number of companies in which he had invested were moving deposits to Revolut and Wise.
“Many startups have had trouble building banking relationships…if you’re a startup you might have all of your cash at SVP.
“It could be that the Bank of England says it will freeze SVB’s assets to prevent a run. So if you’re a startup people have no choice but to make sure their liquidity is safe – it’s a matter of survival.
“Wise and Revolut are easy to set up are licensed institutions so you can move a fair amount of money into them.”
Seb Wallace, a venture capital investor at Triple Point, said: “The standard operating procedure in venture-back businesses would be to open an account from one of Starling, Revolut, Monzo and others [and] most startups have a Wise account.
“But this [collapse] has rammed home a prudent cash management approach and firms have a clear need now to have multiple bank accounts to spread risk.”
Another centure capital partner, who wished to remain anonymous, said tech firms were also channelling money into TreasurySpring, a London-based cash management fintech, in a move to diversify their cash management.
A Wise spokesperson said they were unable to comment on the activity by tech firms. TreasurySpring did not respond to calls.
The UK arm of SVB became a full-scale subsidiary in September last year. The firm yesterday told to UK clients, partners and external stakeholders it had financial position as a standalone independent banking institution with UK regulators in a bid to reassure customers.
However, the Bank has since confirmed it has entered insolvency. A statement on the SVB website said: “We are announcing that following conversations with the Prudential Regulatory Authority there is an intention, barring any intervening event, to put Silicon Valley Bank UK Limited into insolvency from Sunday evening.”
This story was updated to reflect the announcement by the Bank of England that SVB UK had entered insolvency.
