The bankruptcy of banks specializing in loans to technology companies is concentrated on solar companies, and climate crisis companies are the worst victims, and the stock market is showing ripples due to IPO obstacles.
Silicon Valley Bank's major lenders, the largest and fastest-growing since the 2008 financial crisis, include more than 1,550 technology companies involved in solar and hydrogen battery storage projects, with tens of billions of dollars in loans.
The SVB website advertises in its <Clean Technology & Sustainability> bulletin, “We will help you drive positive change through powerful energy banking and lending solutions, expert insight and advice, and unmatched industry connections.” there is.
“SVB supports the change agents who advance the future of climate technology,” the website states, “more than 1,550 prominent clients in the climate technology and sustainability sectors choose to bank with SVB.”
Among corporate loans, SVB focused its financing transactions on 'community solar projects', which are small-scale solar projects that provide services to low-income residential areas, from project loans, and the proportion led 62% of the projects.
The website has advertised the loan as a major project based on "experience and industry knowledge in a wide range of clean technology, climate technology and sustainability industries, including solar, wind, battery storage, fuel cells, utility storage, and more".
Kiran Bhatraju, CEO of Arcadia, the largest community solar project in the United States, said, "Silicon Valley banks have been climate banks in many ways. Securing most of the market banks through one institution will do a lot of collateral damage." "The project will be significantly delayed as developers go looking for new sources of capital," he told The New York Times.
The concentrated lending to climate companies stems from the federal government's multibillion-dollar tax cuts to support and develop innovations in climate technology companies, guaranteed as "sustainable projects."
Daniel Firger, founder of Great Circle Capital Advisors, a 'sustainable finance' consultancy in the US, told the NYT that "if the flywheel of financing early-stage climate innovation stops at a critical time, it will be a big problem." said.
Peter Reinhardt, CEO of Charm Industrial, a carbon removal company founded five years ago, withdrew millions of dollars from a bank on the 7th, on the verge of bankruptcy.
"We withdrew most of our cash on Thursday," he told the NYT. "When it becomes clear that everyone is withdrawing money, psychology asks you to run away too."
The company is a climate technology company that uses plants to absorb carbon dioxide, then liquefies it and stores it underground.
Ethan Cohen-Cole, CEO of Capture6, a climate company unable to withdraw cash, has $4 million in deposits tied up in a Silicon Valley bank's MMF. The Berkeley, California-based company makes devices that remove carbon from the atmosphere.
Cohen-Cole said the Federal Deposit Insurance Corporation expects to be able to pay its employees monthly due to the insurance it provides.
Data firm HolonIQ's website says venture funds into climate tech startups surged 89% last year, with more than $70.1 billion invested.
“European venture funding for climate tech more than doubled in 2022, with investments in China for the first time and a massive 89% increase globally compared to 2021 record, with huge increases in India and globally,” the website states. has grown,” he said.
The biggest concern in the Silicon Valley bank failure is the creation of new sources of funding and credit to replace the strong reliance climate startups have been relying on the banks to build projects and extend their loans and lines of credit.
Varun Sivaram, Executive Director of Renewable Power Company Orsted, said: “If climate technology companies fail or fall behind, the overall impact of climate law could be diminished. "All of these investments are necessary to expand as quickly as possible and utilize the Inflation Reduction Act (IRA)," he told the NYT.
The Silicon Valley bank collapse has increased the risk of derailing fast-growing tech and climate companies renewable energy sectors in the venture capital sector.
Data firm HolonIQ said “strong investment momentum in the United States continues through mid-to-late 2023” and “currently has 180 Climate Tech Unicorns worldwide with a total value of $70.1 billion.” SPAC (Special Purpose Acquisition Company) through a paper company (paper company) avoiding an IPO is a “popular route” and appears to be a significant bad news for the stock market.
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