Black Startups Who Banked with Silicon Valley Bank in Fear of Losing Money
The recent failure of Silicon Valley Bank has sent entrepreneurs has sparked a financial crisis among startups. For some black founders and investors, the meltdown has resurfaced issues surrounding their interactions with the financial sector.
On March 15, about 20 members of Atlanta’s Black business community gathered on a zoom call to compare notes. A co-founder of Atlanta Black Tech, Joey Womack, said the call was to determine how to fill the gap left by SVB.
Barbara Jones-Brown, Founder and CEO of Freeing Returns, said the bank declined her credit cards during lunch with a prospective client. She also said the card was tied to her SVB business which opened last year at the prompting of one of her investors. She opened the account after raising $3 million, and her acquaintances told her it would be easier to manage the money if she banked with SVB.
Jones-Brown said she was able to avoid the payroll nightmare experienced by other business owners. However, she said her biggest worry is a broader industry pullback. She also said she had to lay off two employees after using her latest hiring and product development funding round.
Kelly Burton, CEO of the Black Innovation Alliance, said there would likely be a decrease in black investments. She said this would happen as investors became more concerned about their financial commitments. Burton also said that this isn’t good for black founders, because there are speculations that SVB is failing due to its heavy focus on diversity.
The founder of a tech company, Sherell Dorsey, predicted that the black tech ecosystem would suffer as a result of SVB’s failure. She said she would miss the bank as a force that created space for Black innovation. Dorsey also said Silicon Valley Ban was a true partner in the ecosystem.
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