Following Silicon Valley Bank's abrupt collapse, the Federal Reserve Board announced on Sunday that the Federal Deposit Insurance Corporation would complete its resolution of Silicon Valley Bank.

Following Silicon Valley Bank's abrupt collapse, the Federal Reserve Board announced on Sunday that the Federal Deposit Insurance Corporation would complete its resolution of Silicon Valley Bank.

This will be  in a manner that fully protects all depositors, both insured and uninsured." This was part of a larger plan to support the American financial system.
The action comforted startup executives in Seattle, Silicon Valley, and other parts of the country. 

The extraordinary bank run that left Silicon Valley Bank bankrupt late last week was the cause of many of those tech leaders spending the previous four days looking for solutions. The rush was precipitated by a decline in confidence in the bank's financial situation.

The catharsis, meanwhile, was also accompanied by residual anxiety about the larger U.S. financial systems and resentment over how Silicon Valley Bank collapsed. Nevertheless, according to Kirby Winfield, founding general partner of Seattle-based venture capital company Ascend, said the news is "certainly a much-needed relief," which he remarked shortly after the announcement. 

He and Jen Haller, Ascend's chief of staff,  had been working online all weekend to support the company's portfolio firms, as did many others in the startup and investing worlds.

On Sunday afternoon, many investors and company owners whom GeekWire contacted expressed this emotion and delight in how their teams worked together to handle the issue. 

Graham & Walker, formerly known as the Female Founders Alliance, had long been supported by Silicon Valley Bank, according to Leslie Feinzaig, the managing director and founder of the venture capital business.

Read Also: Investor On The Collapse Of SVB: 'A Crisis Of Confidence Isn't Always A Problem Of Fundamentals'

Feinzaig wrote in an email sent on Sunday afternoon, "We were heartbroken by its collapse but also personally affected, with all of our cash locked up at SVB. "It is challenging to sum up, the past four days."

Graham & Walker's founder and managing director is Leslie Feinzaig. In the last 18 hours, more than 50 mentors in the Graham & Walker group gave hundreds of hours of their time to help the affected founders, according to Feinzaig.

She said: "At this time, I am tremendously pleased with the leadership displayed by my team and by the creators of our portfolio, who negotiated this situation with grace and professionalism, and appreciative of the many L.P.s and fellow investors who contacted out with encouragement and concrete offers of help for our fund and portfolio.

The Fed's action addresses a potential liquidity shortage for many companies. Once the news broke, Aviel Ginzburg, the general partner of Seattle-based startup capital company Founders' Co-op, said, "I'm simply glad that folks will make payroll tomorrow and not regrets about all the preparedness and contingencies everyone put in place in case the Fed didn't come through.

Co-founder and CEO of Seattle-based business Shelf Engine, Stefan Kalb, said the worries were made worse because he would be personally responsible for any overdue payment as a founder.

While Shelf Engine has received over $60 million in venture capital, Kalb declined to specify how much the company had invested in Silicon Valley Bank. Customers of the 40-person company, which provides service to more than 2,000 grocery stores nationwide, have expressed anxiety about potential service interruptions.

According to Kalb, the Fed's announcement was what needed to happen. "I'm incredibly appreciative. Over the past three to four days, it has been rather hectic.

Silicon Valley Bank was the primary banking institution for 80% or more of the Seattle area's venture-backed technology and life sciences businesses, putting the sector at disproportionate risk of the financial crisis. Comparatively, nearly 50% of I.T. and life science businesses nationwide banked with Silicon Valley Bank.

Depositors and Investors withdrew $42 billion in deposits on Thursday. This left Silicon Valley Bank with a negative cash balance of $958 million, forcing regulators to step in and shut the bank down due to liquidity concerns that led some venture capital firms to advise founders to withdraw their money from the bank.

To reduce the effects of SVB's bankruptcy, the Fed declared on Sunday that it would provide additional liquidity to other banks and commit to going above the standard FDIC insurance limits of $250,000 per depositor. When they made that decision, regulators closed Signature Bank, a financial institution heavily used by the bitcoin sector.

According to Washington Technology Industry Association CEO Michael Schutzler, the news should make it easier for company founders to sleep tonight.

He added that the disparity between the resulting devaluation of long-term investments such as bonds and rising interest rates still exists. This was what led to the failure of Silicon Valley Bank. 

The failure of Silicon Valley Bank, according to Schutzler, affected hundreds of WTIA's 1,000 member companies but had no financial impact on WTIA itself. He claimed that as a seasoned investor and startup leader, he could relate to startup executives who were taken off guard by the bank's failure. 

The last thing a startup entrepreneur thinks when a funding round is received, and an investor advises leaving it with a specific bank, is diversifying deposits across many institutions to spread the financial risk.

Schutzler remarked, "This is a nightmare that no one thinks about. Nevertheless, he claimed to have spoken with one chief financial officer who, late on Wednesday, learned what was going on and, on Thursday, safely withdrew his company's remaining balance from Silicon Valley Bank, saving its cash but also helping to fuel the bank run that ultimately rendered SVB insolvent.

The CFO's expression, which reflected the bigger Catch-22 that startups have been confronting lately, was a mix of relief and remorse. In the days and weeks to come, issues surrounding who knew what was happening, when they knew it, and how some people could obtain information before others are likely to continue to vexe many in the tech sector.

But for now, the Fed's action provides a chance to take a deep breath. Grin Lord, the company's founder, and Anna Gunn, the vice president of finance, have been working round the clock since Thursday to figure out how to transfer the company's money out of its Silicon Valley Bank accounts, according to Grin Lord, founder of Bellevue, Washington-based artificial intelligence startup empathic.

Although many people are still touched, the crisis will be avoided for us, she stated following the Fed's pronouncement on Sunday. I'll continue using our work to cut costs and be lean since it's a fantastic leadership exercise.

Lord gave her investors credit for assisting with advice. But, she said, "The finest thing they did was alert me right away when they were removing monies. This is a chance for founders to assess their business partners, she continued. "And for investors to observe how their founders prioritize their teams and communicate during a crisis."