‘A huge relief’: Startups react to Silicon Valley Bank UK’s HSBC rescue deal

LONDON — U.K. startups are breathing a sigh of relief Monday, after HSBC announced it would buy a subsidiary of collapsed U.S. tech startup lender Silicon Valley Bank.

“We can look our teams in the eye at 9 o’clock in our all-hands calls, which were going to be pretty nerve wracking this morning, and say, not only will we be able to make next payroll but we can continue business as usual,” Toby Mather, CEO of London-based tutoring app Lingumi, told CNBC’s “Squawk Box Europe.”

His startup holds the majority of its cash with SVB UK.

“I think I speak on behalf of U.K. start-ups when we say this is a huge relief,” he said.

It follows a night of crunch talks to save customer deposits after U.S. regulators shut down SVB Friday, rocking the financial world.

HSBC said it had agreed to acquire SVB UK for £1 ($1.21) and would protect deposits.

Brent Hoberman, executive chairman of startup accelerator Founders Factory and co-founder of online businesses lastminute.com and Made.com, said that anything short of a 100% guarantee on deposits would have had significant knock-on effects for U.K. tech, and the deal was a “huge relief.”

“SVB UK has a decent balance sheet which enabled HSBC to do this deal,” he told CNBC by phone. “If it had been terrible it would have had to get government deposit insurance but that wasn’t necessary as it is profitable.” SVB UK reported profit before tax of £88 million for 2022.

“We continue to have a strong player in SVB, who provide so many services founders want,” Hoberman said, adding that the combination of SVB UK and HSBC, “if well-executed, could be even more of a positive flywheel in the U.K.”