According to a top Goldman Sachs dealmaker, the collapse of Silicon Valley Bank was a significant moment for the technology industry, similar to the Lehman Brothers collapse. Cliff Marriott, co-head of technology, media, and telecoms in Europe for the investment banking division of Goldman Sachs, described the events of March 10th, when SVB shut down, as “pretty stressful,” with the lender’s clients scrambling to figure out how to make payroll. He noted that the first weekend after the collapse was similar to the Lehman moment for the technology industry, and that companies were mostly concerned with operational issues, such as needing access to capital and payroll payments, as many of their balances were on SVB.

SVB was founded in 1983 and was considered a reliable source of funding for tech startups and venture capital firms. At one point, it was the 16th largest bank in the U.S. and the largest in Silicon Valley by deposits. After its clientele of venture capitalists and tech startups withdrew billions from their accounts, SVB was taken over by the U.S. government. Many venture capitalists had advised their portfolio companies to pull their funds due to fears that the lender might crumble.

SVB Financial Group’s assets, such as U.S. Treasury bills and government-backed mortgage securities, which were viewed as safe, were hit hard by the Fed’s aggressive interest rate hikes, causing their value to drop dramatically. The future of SVB is uncertain, despite the fact that the government ultimately backstopped deposits, and SVB’s government-appointed CEO reassured clients that the bank remains open for business.

Earlier this month, SVB revealed that it had sold $21 billion worth of securities at a loss of roughly $1.8 billion and needed to raise $2.25 billion to meet client withdrawal needs and fund new lending. Although the government ultimately backstopped deposits and the bank’s government-appointed CEO reassured clients that it remained open for business, the future of SVB remains uncertain. According to Marriott, there is still a significant question mark regarding which bank or firm will replace SVB in terms of providing utility-like services to technology companies, such as bank accounts, payroll processing, and cash balance holding.

The collapse of SVB has also raised questions about the potential consequences for other banks that have come under strain. Last week, Credit Suisse, a Swiss investment banking giant, was rescued by its main rival UBS in a government-backed, cut-price deal.

Marriott also discussed the outlook for tech IPOs in 2023. Higher interest rates and other market pressures have largely closed Europe’s tech IPO market. Two weeks ago, Marriott was more optimistic about a recovery in tech IPO activity. He remains hopeful that there will be tech IPO activity in 2023, and if not, 2024 will be a significant year for tech IPOs. The more established, profitable companies with easier-to-understand business models are expected to come first before the highly valued, profit or negative profit companies seen in 2021.