Photo: REUTERS / Dado Ruvic
The collapse last Friday of Silicon Valley Bank (SVB), which served as the go-to bank for tech startups and venture capital firms, didn’t spare the retail industry.
Among those in the retail space impacted:
- Some Etsy sellers had their payments delayed by one business day. The online marketplace worked with other payment partners to resume payments by Monday.
- Shopify halted payments to online sellers with SVB accounts, telling merchants they must switch accounts to receive funds.
- Poshmark, the resale marketplace, assured sellers in a blog entry that their accounts “continue to be safe and secure. We do not use SVB to store customer or marketplace funds, and your ability to process payments and redemptions is not affected.”
- Stitch Fix’s $100 million revolving line of credit included a $40 million commitment from SVB that the clothing subscription box service expected would no longer be available due to the bank’s receivership.
- Camp, the experiential toy store, sent an email last Friday offering discounts and pleading with customers to help it make payroll and keep its nine locations afloat, as 85 percent of its assets were tied to SVB.
By Monday, the near-term danger passed with the U.S. federal government’s intervention to protect uninsured deposits of SVB, the second-biggest bank crash in U.S. history that was precipitated by the sudden rise in interest rates. SVB’s collapse also disrupted major tech players, including Roku and Roblox. With the government also taking over Signature Bank, changes to the banking system, particularly stricter federal regulatory oversight of mid-sized banks, may be forthcoming.
High interest rates may mean the end of the easy money era for tech startups. It may also create turbulence for retail’s digital push.
The collapse, for some, signals broader fallouts reminiscent of Bear Stearns’ failure in March 2008, a precursor to the global financial crisis. Thursday’s bailout of Credit Suisse by Switzerland’s central bank further raised fears of unseen risks in the financial system.
Gary Wassner, CEO of Hilldun Corp., which finances many designers, told WWD, “When things like this occur, it creates more uncertainty in an already uncertain environment.”