At SXSW, tech workers react to the failure of the Silicon Valley bank

• When the South by Southwest tech conference started in Austin on Friday, Silicon Valley Bank failed.
• The annual festival is known for attracting hundreds of startup founders and tech investors.
• Participants from Startupland try privately to understand the news.

When South By Southwest got underway in earnest on Friday, many attendees secretly panicked.

The annual festival, which hosts thousands of attendees from the entertainment, politics, business and technology worlds, began its first day with news that Silicon Valley Bank was placed under FDIC control after thousands of customers rushed to attend to withdraw money from their bank.

Almost half of all US venture-backed startups use the bank’s services, according to its website, and amidst its implosion, many of them have had to struggle to secure their companies’ funds.

The festival is known for attracting startup founders, employees and investors who attend the many panels and networking events during the first half of the 10-day conference. And many attendees, seen with the orange “Interactive” badge, were taped to their phones and computers in the convention center and badgeholder lounge.

Jessica Lessin, Founder and CEO of The Information, tweeted on Friday that the SVB news was “by far the craziest experience” of her career. Later on Friday, Lessin shared an Instagram Story post showing her SVB credit card being declined while she was traveling to SXSW.

“The reality right now is we’re really waiting to see how bad things get — or if they stabilize,” Lessin told Insider. She described the situation as a “distraction” rather than a cloud over SXSW.

Facebook whistleblower Frances Haugen, speaking at SXSW this year, is focused on the potential fallout from the SVB collapse and upcoming US government action.

“It is likely that unless the government steps in to stop the contagion triggered by the SVB bank run, more regional (or even large) banks will fail,” Haugen told Insider. “However, I am concerned that even though Big Tech will benefit from SVB shutting down the startup community, even though Big Tech will benefit from SVB shutting down the startup community, Biden will feel like he can’t act because of public animosity towards Big Tech. It will be a financial mess spreading to Main Street.” affects.”

Conway Anderson, a startup founder who flew to Austin on Saturday, tweeted that, surprisingly, the public chatter appeared to be nothing to do with SVB’s implosion, but that founders are voicing their concerns in private chats.

— Conway (@ConwayAnderson) March 11, 2023

“South By Southwest’s private chats and public chats seem very different. Most people at South By are probably aware of that [of Silicon Valley Bank] but everyone wants to make the most of it and not get too involved in things that we can’t control,” Anderson said.

Roku, for example, held 26% of its cash in SVB — roughly $487 million in deposits. But things are looking up in Roku City, the media company’s interactive event at SXSW. Guests traveled through Roku City’s pop-up recreation, sipping colorfully themed cocktails at the bar while a DJ played dance tunes.

But while attendees might try to stay positive over the weekend, the tone could change even more dramatically on Monday as markets reopen and startups and VCs need to get back to focusing on the fallout.