The failure of the Silicon Valley Bank last Friday impacted almost all of the Israeli high-tech firms.
Due to the rapid increase in interest rates, the bank that provided banking services to software companies ran into problems.
Customers quickly withdrew tens of billions of dollars, forcing American regulators to liquidate the bank.
Shaul Olmert, the CEO of Piggy and the son of former Israeli prime minister Ehud Olmert, claims that everyone he knows was able to withdraw money from their current accounts, but deposits that were not able to be automatically moved are currently stuck and are not known when, if ever, they will be released in full.
Olmert told Israel’s N12 channel that the bank provided capital-raising options for high-tech firms that conventional banks wouldn’t approve since the firms couldn’t first demonstrate a positive cash flow.
They were the go-to boutique bank for businesses worldwide, notably in Israel. Nearly every startup, big or little, received assistance from them.
According to Olmert, certain businesses may experience an issue soon.
“There will be some businesses that cannot endure the waiting period for new funding. He continued that others will wait it out, like when the coronavirus first appeared and not all the deaths were immediately apparent.
At the end of the week, the Federal Reserve froze 175 billion dollars worth of assets.
The bank’s unique asset turned into a liability when high-tech businesses progressively felt the effects of the recession, withdrew substantial sums, and could not repay their debts.
Customers started holdings from the bank because it held American bonds and had to repay them at higher rates because it was short on cash.
Some Israeli businesses have reported that their assets are locked up at the bank, while others claimed they could withdraw money successfully.
The Israeli finance ministry has established a ministerial committee to look into the businesses impacted by the bank’s collapse and, if necessary, to assist.
Although they wait for the release of funds by federal regulators, other digital finance companies, like Brex, a rival of SVB, have declared that they will assist both new and existing customers in receiving cash.