“Honestly, it was the most similar thing I’d seen to the 2008 crash, where everyone was walking around with their phones out and laptops open.

"Everyone had their SVB account up on the screen,” Flower said. “The anxiety in the air was palpable.”

One businessman told Flower, who isn’t a customer of the now-collapsed bank himself, that he had recently deposited $20m in his company’s Silicon Valley Bank account after closing a recent funding round.

“The entire $20m was in his SVB account. He’s looking at me, going: ‘I don’t know what to do.’”

That anxiety defines much of the mood music caused by the collapse of a financial institution that the tech startup and venture capital industry regarded as its favoured lender and banking services provider.

Through its Irish arm, it had loaned money to several prominent Irish startups. Meanwhile, it was a friendly bank for European startups expanding into the US and looking for a local bank.

SVB’s collapse marks a pivotal chapter in the ongoing tech sector downturn, and questions swirl about the immediate and long-term future of startup funding in Ireland and beyond.

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Even before SVB dramatically collapsed, the global startup funding environment hadn’t been looking particularly rosy.

The previous several months had seen interest rates rise, and a downturn in the tech sector was sending shockwaves across the industry.

That slump had started to seep into the Irish startup ecosystem.

Latest figures from the Irish Venture Capital Association show that cash raised in 2022 was flat year-on-year at €1.3bn, with a dramatic drop-off in the fourth quarter.

In the last four months of the year, funding dropped from €458.5m to €244.6m – a drop of nearly 47pc compared to the same quarter in 2021.

Meanwhile investments by international investors in Irish startups fell dramatically by 73pc – from €214m to €58.3m.

These figures mirror the global sentiment of late 2022 when the tech sector began its retrenchment, typified by tens of thousands of job cuts across the industry.

“It’s clear now that we reached a high point in 2021 and here in Ireland that continued into the early part of 2022,” said Sarah-Jane Larkin, director general of the Irish Venture Capital Association.

Despite that setback, Larkin said that at the beginning of the year she was “hopeful” the industry would start to recover – but Silicon Valley Bank threw a wrench in the works when it comes to investor outlook.

That could create headaches for Irish tech companies trying to scale up operations.

International venture capital firms have made up the lion’s share of investment in later-stage funding rounds, often putting in sums above the €10m mark.

In the heady days of 2020 and 2021, some notable US venture firms invested in big-ticket funding rounds, including names like Tiger Global and DST.

The drop off in overseas investor activity is a concern, Larkin said.

Those big-money backers may focus more on existing portfolio companies, leaving a dearth of later-stage money for Irish companies that need it for scaling.

“Given that we’re so reliant on overseas, I think it’s going to deepen that cycle that we’re experiencing already,” Larkin said.

“We have always known we’ve had a problem with replicating some of those funding sources when the tide goes out. I think that’s more crucial now than it has ever been for our economic future.”

On the seed-funding front, the current picture is not as stark.

The recently inaugurated €90m Innovation Seed Fund – led by Enterprise Ireland, Ireland Strategic Investment Fund, and the European Investment Bank – will go some way to ensure nascent startups continue to be funded at the earliest stages, Larkin added.

“Seed funding in Ireland had totally bucked the trend in 2022 – and that’s because of seed funds that are in receipt of Irish state funding.”​

Daniel Campion, the chief executive of telecoms tech startup Sitenna, is in the middle of raising a $3m funding round.

The startup had been a customer of Silicon Valley Bank but retrieved its deposits in the bank run prior to its collapse.

Campion told the Sunday Independent that the drama of recent weeks has been a “wobble”, however he says the company remains on track to close the round soon. Still, he says the jitters in the market are notable.

“We’re more than halfway through and we’re going to close it out at the end of the month – but we are on track to close with that, whether it’s the full three or not. It’s just taking a bit too much time. The wider market is a bit slower,” he said.

“You can definitely see the slowdown in market sentiment, but we’ve got very positive traction and movement going on – so I’m still very confident in where we’re going. SVB certainly didn’t help – but it hasn’t changed things, no investors dropped out.”

Wayleadr’s Flower added that his company is gearing up to raise its next round of funds after raising $4m last year. However expectations will be greatly adjusted in this new landscape.

“There are some hard truths. Profit is more important now – it’s not growth at all costs. Founders have to care about growing a profitable business, a sustainable business with good fundamentals,” he said.

“I think what the environment shows is that the inflated valuations are no longer there. You won’t have companies that go from zero to a billion in a year or two.”

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While the tech industry makes sense of the Silicon Valley Bank fiasco, the unrest in the banking sector rumbles on.

The fall from grace of Credit Suisse and its discount takeover by UBS last week adds to an expanding list of anxieties for the tech sector.

Credit Suisse did not carry the same cachet among startups that Silicon Valley Bank did, but it was still an active lender to and investor in young tech firms.

This includes Dublin-based fintech company Wayflyer, an alternative lender to e-commerce businesses. It raised a $253m debt facility from the Swiss bank last year.

Last week Wayflyer said that UBS’s takeover of Credit Suisse will not affect its ability to continue operations and issue loans, pointing to several other funding deals it has to shore up its ability to lend.

“We have a diverse range of funding sources to protect against any single counterparty risk, including a $300m debt facility from JP Morgan, a $150m series B equity raise, and a $76m aeries A equity raise,” said a company statement.

Venture debt is one source funding that startups can turn to. Unlike traditional VC investments, venture debt allows startups to raise funds without giving up any equity or altering the valuation of the company.

According to funding research firm Pitchbook, the value of venture debt deals in the US rose from $7.5bn in 2012 to a high of $33.3bn in 2020.

SVB was the largest lender of its kind with generally friendly terms for not-yet-profitable tech startups. As it seeks a buyer for the bank, accessing venture debt could become more difficult or come with less favourable terms.

“I think venture debt is generally going to take a hit – as it would have due to rising interest rates. That’s irrespective of whether Silicon Valley Bank fell over or not,” Campion said.

“I think the days of unbelievably cheap capital on debt are largely past.”

Lenders will be more analytical in future about what startups to lend to, he added.

“There’s always going to be a place for it, but I think that during the days of cheap capital, there were possibly companies that were too early or not in the right frame to be getting venture debt – but they were getting venture debt.”

Larkin said Irish startups still have the option of the likes of the European Investment Bank.

“I think the impact of Silicon Valley Bank is maybe the ease of how much they understood technology and understood this space,” she said.

“That is maybe more impactful for Irish companies trying to expand than actual access to venture debt.”

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