Since Friday, we have been following Silicon Valley Bank's collapse to ascertain the potential extent of its impact onto Sapphire's funds and the early stage VC sector in general.

This morning HSBC officially agreed to purchase Silicon Valley Bank UK, which means that business interruption was averted for many of the UK's early stage companies that we work with.  

As noted by Christiana Stewart Lockhart, Director General of the EISA:

"...this solution came with no negative repercussions on UK tax payers, or day to day business operations."

Chancellor Jeremy Hunt said:
“The UK’s tech sector is genuinely world-leading and of huge importance to the British economy, supporting hundreds of thousands of jobs. I said yesterday that we would look after our tech sector, and we have worked urgently to deliver on that promise and find a solution that will provide SVB UK’s customers with confidence. Today the government and the Bank of England have facilitated a private sale of Silicon Valley Bank UK; this ensures customer deposits are protected and can bank as normal, with no taxpayer support. I am pleased we have reached a resolution in such short order. HSBC is Europe’s largest bank, and SVB UK customers should feel reassured by the strength, safety and security that brings them.”

Prime Minister Rishi Sunak went on to say that:

“I will always be on the side of entrepreneurs, innovators, young people inventing the future. Because the biggest lesson I took from my time in California still guides me now. What really matters for economic success – is innovation. If we want our country to succeed, we need to do what we’ve always done and embrace new technologies, and the people and culture that creates them. No serious analysis of our prospects could conclude anything different. I hope SVB UK customers feel reassured today by the strength, safety and security that today’s news brings them.”

This event shows that financial institutions, both young and old, big and small, pose systemic risk.  The collapse of a commercial bank may be recorded as a financial risk on a risk matrix. Yet, a bank's collapse affects more than just financial risk...  It affects valuations as well as deal activity in the short to medium term.  It affects consumer confidence, volatility, the price of both public and private securities....

It should come as no surprise that the VC sector globally will continue to be affected by this bank's collapse, indicating just how interconnected our financial lives really are.