Tuesday, June 6

The failure of Silicon Valley Bank unleashes an earthquake in the ecological transition of the United States

“We withdrew the money at 5:00 p.m. US East Coast (10:00 p.m. PST) on Thursday, Silicon Valley Bank (SVB) suspended payments the next day.” This is the answer given by Peter Reinhardt, co-founder of Charm Industrial, the startup that buries Microsoft’s CO2. He and his three partners form one of the more than 1,500 start-ups in the climate technology sector affected by the bankruptcy that has unleashed nerves in the economic world.

In the SVB portfolio there are companies that manufacture batteries, related to hydrogen or solar panels. “It has been focused exclusively on providing financing to the US climate technology market,” says Daniel Firger, managing director of Great Circle Capital Advisors, a consultancy focused on transitioning capital markets to a net-zero emissions model.

Billions of dollars, according to various statistical offices, which included “not only basic banking services for start-ups, but also their debt financing,” adds Firger. “We had millions of dollars on deposit for payroll and general company investments,” recalls Reinhardt.

“We had millions of dollars on deposit with Silicon Valley Bank for payroll and general company investments”

peter reinhardt

co-founder of Charm Industrial

A faucet that was cut off last Friday, March 10, and left the future of companies and their workers up in the air. “Our main concern is not paying the payroll”, highlights the CEO of Charm Industrial. “Like many in our industry, we found out Friday morning that our assets at Silicon Valley Bank were frozen. This was a terrifying moment », he adds in an official Capture6 statement on his Linkedin profile. “We are deeply grateful and incredibly fortunate that the Treasury, the Federal Reserve, and the FDIC declared Silicon Valley Bank to be systemically important,” they add. A movement that made it possible to guarantee all bank deposits, but now the problem is another: debt financing and the speed of deployment of green technology.

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“It certainly creates unfavorable macro conditions for those startups to grow rapidly,” says the CEO of Great Circle Capital Advisors. In the twelve months of 2022, climate technology accumulated more than 70,000 million dollars of investment from venture capital, according to data from HolonIQ, which means doubling the figure noted during 2021 that remained at 30,000 million, according to Pitchbook.

Multi-million dollar numbers that were accessible to these start-ups through a single channel: “Many companies and entrepreneurs put their trust in only one bank, the SVB,” explains Firger. Among those financed are Charm Industrial or Capture6, but also six out of ten community solar projects with 3.2 billion dollars disbursed for their deployment. “That’s two-thirds of all community solar projects across the country,” Firger says.

Two-thirds of US community solar projects were funded by SVB

In recent years, the United States has seen these community plans grow to 5.6 gigawatts of solar power, a figure that is equivalent to five natural gas plants. Through these projects, customers who cannot install solar panels on their homes can purchase solar panels from local solar installations to reduce their energy bills, a number that is expected to double in the next five years, according to the Solar Industries Association. Solar Energy, but which is now up in the air as it loses, for the moment, its main financier. “Every company in this new technology that was in debt or project financing talks has returned to the starting box,” warns the CEO of Great Circle Capital Advisors. In addition, “any type of manufacturing plant construction or asset financing plans may be delayed depending on the weather,” he adds.

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However, “the impact it can cause is not yet quantified or calculated,” adds the CEO of Charm Industrial. “Anything that adds uncertainty or hurdles on this rocky road we already know is going to be a problem, because we desperately need all available technologies to move from demonstration and pilot projects to mass adoption to have a chance of sustaining the increase in the temperature by 1.5 degrees or, increasingly, even by just 2 degrees,” Finger warns.


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