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Silicon Valley Bank (SVB) Collapse: What It Means for Climate Technology, Green Energy

March 14, 2023 by Joe Panettieri

The collapse of Silicon Valley Bank (SVB) could have financing implications for climate- and green-focused technology startups.

Among the factoids to keep in mind:

  1. Climate technology companies raised $59 billion in funding across 1,182 deals in 2022, according to BloombergNEF.
  2. US venture capital investments in climate tech companies increased 80% between 2020 and 2021, reaching $56 billion, SVB said in a 2022 report.
  3. SVB served more than 1,550 customers focused on clean technology and sustainability, the bank said before its collapse.
  4. Traditional banks typically do not work with climate and sustainability startups because such companies typically have unproven, highly risky business models.

Near term, such startups will need to navigate a higher cost of capital for a credit line, a Guggenheim analyst told Bloomberg.

Some pundits are hopeful that the U.S. Inflation Reduction Act in some ways may fill the funding and financing void. The act includes approximately $369 billion in incentives for clean energy and climate-related program spending, including funding to encourage carbon capture, utilization, and storage (CCUS) projects, according to the U.S. Department of Energy.

Some climate-savvy banks may also step in to fill the SVB financing void. Among the companies to watch: Forbright Bank, which is a full-service bank, direct commercial and consumer lender that's "committed to playing an important role in accelerating the transition to a sustainable, clean energy economy," the bank asserts.

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