The latest news of the collapse of Silicon Valley Bank may also prove threatening to a large number of climate tech startups.
The bank that is considered to be the largest to fail since 2008, worked with over 1,550 companies involved in climate technology projects, including hydrogen, renewables and battery storage.
Kiran Bhatraju, chief executive of Arcadia, the largest community solar manager in the United States, described Silicon Valley Bank (SVB) as a climate bank, due to the billions of dollars issued in loans to companies in the sector.
“When you have the majority of the market banking through one institution, there’s going to be a lot of collateral damage,” Bhatraju said.
Community solar projects, in particular, appear to be among the ones affected the most by the bank collapse.
According to SVB, it was involved in the financing deals for 62% of all community solar projects in the country, most of which are small-scale projects predominantly concentrated in lower-income residential areas.
The blow delivered by the bank’s collapse is particularly devastating, as it comes at a critical point in time, when the budding sector is key to mitigating the climate crisis and limiting the rise of global temperatures.
If climate financing stalls during this crucial period, it may prove to be a major problem for the planet and future generations.
And the collapse of SVB alone is enough to jeopardize what up until now was considered to be the fastest growing part of the venture capital sector.
According to data provider HolonIQ, climate tech startups saw a total of $28 billion invested in 2022, which was drastically more compared to the previous year.
Other financial institutions are currently scrambling to fill the void formed by the collapse, like venture capital firm Prelude Ventures, which manages $1.5 billion and has a strong focus on climate technology.
Managing director at Prelude Ventures Gabriel Kra said: “In the short term there are companies that are at risk of not making payroll. We are scrambling to provide that liquidity to those companies in the next few days.”