Silicon Valley Bank was in Austin this week, sponsoring and hosting parties at AfroTech, the largest Black tech conference in the nation. It’s been eight months since SVB’s dramatic collapse, where hundreds, if not thousands, of founders fled to competing banks. At one of their parties, reggae and Afrobeats played loud, and the drinks were flowing. It was as if nothing had ever happened. Did it?
I did a vibe check to see.
For a few Black techies, the bank’s presence in Austin left an awkward taste. A founder at the conference, who asked to remain anonymous, told me it felt “in poor taste” for the bank to throw a celebration at a Black tech conference like this. “That terrible fallout impacted so many Black founders who banked with them and had the rug pulled out from under their feet,” she said.
Reputation has always preceded it. Luke Bailey, the founder of Neon Money Club, has never banked with SVB because of the bank’s concentrated risk. Still, he told me he’s always respected the organization and found its presence at the conference to be endearing.
“While its leaders had some missteps that led to its downfall, that bank had arguably the best startup banking team in the nation and practically invented the category,” he told me. He admits that many Black founders he knew who moved from the bank never went back, but he thinks many people have moved on from that situation.
“I think it’s dope that the SVB team still seems committed to our community, and it screams ‘mission-driven’ beyond circumstances,” he said. “They sort of have to earn trust again from scratch.”
At a press roundtable, Simone White, the senior vice president of AfroTech, told us that the bank had been a partner with the conference for nearly five years and that it came back this year larger than ever. “They’re here,” she said, emphasizing their presence. White said this showed the bank’s commitment to supporting Black founders despite its challenging past few months. When asked about returning to AfroTech this year, Tosh Ernest, head of SVB’s Catalyst 2045, said simply, “We are at AfroTech again because innovators are here.”
It’s true: The bank has been working hard to rebuild trust, and granted, any other year, its presence at AfroTech wouldn’t have raised as many eyebrows. “Wait, they are here. I thought they went bankrupt?” a founder at a VC happy hour asked me. The bank was always known for hosting parties and lending support to diverse founders. Since its crash, it has sought to rebuild its reputation as a key social player, and an executive at the bank told us at Disrupt that it has also been working to remind founders that it’s OK to come back, that “the water’s fine.” (SVB now operates as a division of First Citizens Bank.)
I mean, sure, even the AfroTech party and open bar are nice, but trust is a hard thing to earn, lose, and then request again — especially for a community that already has a fraught history with financial institutions. Many Black founders I spoke to left the bank and have not looked back. They say it’s too risky given the uncertain financial climate, and working with a more established bank, like JPMorgan Chase, is just a safer place to park money if the going gets tough. Those who stayed ended up diversifying their financial partners, leaning toward a less risk-averse bank. Dealing with startups is rarely risk-free, after all.
Still, a lot of Black founders are rooting for SVB. The bank was there for them, giving loans and accounts when no other financial institution would. It gave them community events in this gate-kept world of venture capital. And if they couldn’t stay, a part of them wanted to. So if grabbing a gin and tonic at that party meant still showing support for the institution, then, well, they would raise a glass. “I feel like everyone has moved on,” a techie at the party told me.
Randall Clark, a partner at Gunderson Dettmer, is on the board of a company that still works with SVB. He was at the conference and commended the bank’s presence overall at AfroTech.
“Their presence at AfroTech is a testament to their continued support of the VC community in general and the Black community in particular,” he said. He believes the reason more founders have not returned to the bank is not as nuanced as one might think. “It’s a bit of a hassle to switch banks,” he said. “For new companies opening up new bank accounts, I haven’t seen a reluctance to work with SVB. Most realize that what happened in March was an anomaly.”
Numbers have not been released on how many SVB customers stayed, left, or have since returned. Eight months ago, I reported on Black founders who were in the midst of being affected by the bank’s crash. I was able to catch up with a few of them before AfroTech to see what they’re up to now.
When we spoke in March, McKeever Conwell, the founder of RareBreed Ventures, was in the process of helping his founders leave the bank. He said it still might be too early to see how the crash has affected Black founders, but he estimates that about 20% of his portfolio, many of whom are diverse founders, have left SVB with no intention of going back right now.
Ciara May, the founder of Rebundle, is one of his portfolio companies. She told us back in March that SVB was her only business account. “I ended up closing our SVB account a few months ago because I never refunded it after transferring all of our funds out,” she told us recently. “Now we use Brex for credit cards and Bank of America Merrill Lynch for everything else.”
One of the only Black people we spoke to in March who actually stayed with the bank was Harold Hughes, the founder of the data company Bandwagon. However, he also opened a Brex account and now uses that for his company’s main deposits. His CFO, Shondra Washington, who is also the founder of TBC-Capital, a financial management firm that provides CFO services to startups, said Bandwagon only decided to stay with SVB to keep continuity with their existing vendors.
Otherwise, she works with nine other founders, the majority of them Black, and said she’s told them to stick with legacy banks.
“We don’t know what’s coming in the next 12 to 18 months,” she said, referring to the wars and economic uncertainty that arise from them. “As a founder, as a Black person, we’re looking for stability, we’re looking for predictability, and that sometimes looks like [fiscal] conservatism.”
Hughes came to the conference but didn’t go to the party; he went to a brunch the bank hosted the next day instead. The bank’s presence is hard to miss. On the third floor of the Austin Convention Center, “SVB” is plastered on everything from lampshades to pillows. Glossy posters expressed the bank was here to help startups scale. “SVB recharge lounge,” another poster read, and, as if it were anticipating one questioning if it were indeed that SVB, the poster continued, “Yes, SVB.”
But the techies didn’t seem to mind. They mingled and recharged their devices. If anything, Hughes said the chaos of the crash taught him, like many others, the importance of having a diversified banking strategy. It also reminded him of the madness that simply comes with being a founder. “It was a blip,” he said of how the crash will soon be remembered.
Though May said she probably wouldn’t return to the bank, Conwell said he would out of loyalty. “When I was a broke founder with bad credit and got my first check from an accelerator, SVB was the only bank that would give me a business account,” he said. “Because of that, I would.”
He, too, is back to being invited to their sponsored events like it’s “business as usual.” He, like other founders we spoke to, commended SVB for being honest about what had happened and for continuing to provide those opportunities. In three years, he said, there will be a new crop of founders who aren’t even thinking about what happened that fateful weekend in March 2023.
“Will they be able to build their reputation back? If you give it enough time, yeah,” he said. “Will it be what it used to be? Well, you might need a much longer period of time for that.”
This piece was updated to reflect that SVB now operates as a division of First Citizens Bank.