Silicon Valley Bank seizure leaves a massive hole — and a large opportunity — in the world of climate finance
A view of Silicon Valley Bank headquarters in Santa Clara, CA, after the federal government intervened upon the bankâs collapse, on March 13, 2023.
Nikolas Liepins | Anadolu Agency | Getty Images
Silicon Valley Bank was the go-to for startups seeking bankers who understood the startup life and balance sheets. That was especially true for the cohort of startups being built and scaled to address climate change.
After a very stressful weekend for many startup founders and investors, banking regulators hatched a plan to backstop SVB’s deposits, ensuring that depositors won’t lose their money.
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Founded in 1983 specifically to help startups, SVB had a strong and established business in climate, boasting 1,550 climate tech and sustainability clients, according to its website.
“Silicon Valley Bank had a very good reputation in the energy transition space and were willing to put their money where their mouth is, unlike many of their peers,” said Mona Dajani, the head of renewable energy and infrastructure law at Shearman and Sterling.
“Many clean energy companies banked with SVB because they had an established and dedicated clean energy practice and they were perceived to have more experience in the clean energy space than most regional and big bulge bracket peers,” Dajani told CNBC.
But the climate space has grown up since SVB started, and that paves the way for new lenders to serve the market.
“Fundamentally, the companies that are coming out climate right now have real strength. These are foundational companies, and people are going to want to lend to them because it’s good business,” explained Katie Rae, the CEO of The Engine, an accelerator and venture fund focusing on tough tech, including climate startups.
“Just in the last three days, I probably have 50 emails in my inbox from different providers saying, ‘Hey, I know SVB is not in good shape. We also do venture debt.’ So many are going to emerge,” Rae told CNBC in a phone conversation on Tuesday.
Wind turbines operate at a wind farm, a key power source for the Coachella Valley, on February 22, 2023 near Whitewater, California.
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Understanding how startups work
Venture-backed startups are an unusual type of business. In their early stages, they may not have cash flow, revenues, or even customers. Instead, they rely on venture funding, where investors offer cash in exchange for equity, hoping that the startups prove out their technology, find customers, and eventually grow into giants.
Providing banking to those kinds of customers requires special skills and an appetite for risk.
“Nobody understands startups as well as Silicon Valley Bank and how to lend to them,” says Zachary Bogue, a long-time tech investor and cofounder of DCVC.
“I envision a startup’s application getting simplify annihilated by a big bank’s risk committee,” Bogue told CNBC.
That was exactly Bill Clerico‘s experience back in May 2009. When Clerico moved to Silicon Valley with Rich Aberman to grow their fintech company, WePay, they had a Bank of America small business account, but the account didn’t have the services the startup needed.
“Silicon Valley Bank understood that even though we may have only had $10,000 or so in deposits at the time, we had a lot of potential,” Clerico told CNBC.
As it turned out, SVB was right to bet on Clerico. WePay was acquired by JP Morgan Chase in December 2017.
“That early investment in our relationship paid off,” Clerico told CNBC. “Over time our deposit balances grew to hundreds of millions, we borrowed millions from them in venture debt, and we processed billions through their accounts.”
In Jan. 2022, Clerico launched Convective Capital, a $35 million venture capital fund investing in wildfire technolog. He ardently hopes somebody can fill the gap left by SVB.
“Some folks may conflate their balance-sheet-driven meltdown with the failure of this startup-focused business model — but in fact, I think that banking startups continues to be a great business and a role that someone needs to fill,” Clerico told CNBC. (Notably, Clerico is an angel investor in Mercury, a startup working to meet this need.)
“I hope SVB and their business model persists in some form,” Clerico said.
The ‘1,000-pound gorilla’ of venture debt lending
In the climate tech ecosystem, SVB was especially prominent in making loans to companies with venture capital funding, known as “venture debt.” It’s essential for startups who are still not generating enough cash flow to be self-sustainable, especially when they are between funding rounds.
“It adds a little bit to the capital that they’ve raised, extends their runway a little bit and gives them more time to make progress on their business,” Rae told CNBC. Venture debt can add between three to six months to the runway companies already have, Rae said.
“There are other places that do venture debt, but Silicon Valley Bank was the 1,000-pound gorilla in the room,” said Ami Kassar, the CEO of the business lending consultant Multifunding.
“The concern now is that even in instances where deposits are made whole, the credit facilities for companies with SVB are likely no longer available, and this is a sector where those are critical,” said Dajani.
That said, making loans to venture-backed companies is a riskier endeavor than traditional banking, Kassar told CNBC.
“I always wondered how they managed to have the regulators allow them to have such a heavy concentration of venture debt,” Kassar said.
Solar panels are set up in the solar farm at the University of California, Merced, in Merced, California, August 17, 2022.
Nathan Frandino | Reuters
Climate is good business
SVB was an early supporter of climate technology, helping a lot of these companies get off the ground. But as the sector has matured, participants believe other financiers will be more willing to lend to these companies.
“Silicon Valley Bank’s early support and commitment to supporting climate tech startups certainly helped catalyze the enormous migration of capital that you’re now seeing deployed into the sector,” Adam Braun, a founder of the climate startup Climate Club, told CNBC.
For instance, SVB provided financing to 60% of community solar projects, says Kiran Bhatraju, the CEO of Arcadia, a climate technology company that, among many services, helps people connect to community solar projects.
In this, the bank “was a climate bank pioneer,” said Steph Speirs, co-founder and CEO of Solstice Power Technologies, which has built a technology to help connect people to community solar projects.
“But renewables have come a long way in the last decade and there’s now a much wider universe of potential financiers looking to get on board,” Speirs said.
That’s what Braun expects to see, too.
“I believe we’ll see many more institutions build dedicated climate practices and funds to support startups emerging in this space,” Braun told CNBC. “While SVB may have been a first mover, I don’t think the events of last week will diminish the desire to finance and support the emerging companies that are leading the rapidly growing climate tech sector forward.”
First Republic and JP Morgan are “increasingly making this category a priority,” Chauncy Hamilton, a partner at the venture capital firm XYZ, told CNBC. “More and more banks are paying attention to climate,” Hamilton said.
Mark Casady, a founder of the venture capital firm Vestigo Ventures, agrees.
“Climate solutions are too powerful a force to be stopped by the failure of a bank. The need is critical and time is not on our side to find solutions. Since this is a fundamental need, it will get more backing rather than less,” Casady told CNBC.
That transition will take time, however. And for companies working to combat global warming, time is the ultimate enemy.
“I do expect big banks to ultimately step up and provide the financing the industry needs to move forward — these projects are just too attractive and the promise of climate tech is too great. But it will take some time, and delays can be costly in the fight against climate change,” Bhatraju told CNBC.
“With all the new investment in climate tech and the opportunities ahead afforded by the IRA [Inflation Reduction Act], there is a ton of momentum. We don’t want to lose that,” Bhatranju said.
Tik Tok creators gather before a press conference to voice their opposition to the “Protecting Americans from Foreign Adversary Controlled Applications Act,” pending crackdown legislation on TikTok in the House of Representatives, on Capitol Hill in Washington, U.S., March 12, 2024.
Craig Hudson | Reuters
The Supreme Court on Friday will hear oral arguments in the case involving the future of TikTok in the U.S., which could ban the popular app as soon as next week.
The justices will consider whether the Protecting Americans from Foreign Adversary Controlled Applications Act, the law that targets TikTok’s ban and imposes harsh civil penalties for app “entities” that continue to carry the service after Jan.19, violates the U.S. Constitution’s free speech protections.
It’s unclear when the court will hand down a decision, and if China’s ByteDance continues to refuse to divest TikTok to an American company, it faces a complete ban nationwide.
What will change about the user experience?
The roughly 115 million U.S. TikTok monthly active users could face a range of scenarios depending on when the Supreme Court hands down a decision.
If no word comes before the law takes effect on Jan. 19 and the ban goes through, it’s possible that users would still be able to post or engage with the app if they already have it downloaded. However, those users would likely be unable to update or redownload the app after that date, multiple legal experts said.
Thousands of short-form video creators who generate income from TikTok through ad revenue, paid partnerships, merchandise and more will likely need to transition their businesses to other platforms, like YouTube or Instagram.
“Shutting down TikTok, even for a single day, would be a big deal, not just for people who create content on TikTok, but everyone who shares or views content,” said George Wang, a staff attorney at the Knight First Amendment Institute who helped write the institute’s amicus briefs on the case.
“It sets a really dangerous precedent for how we regulate speech online,” Wang said.
Who supports and opposes the ban?
Dozens of high-profile amicus briefs from organizations, members of Congress and President-elect Donald Trump were filed supporting both the government and ByteDance.
The government, led by Attorney General Merrick Garland, alleges that until ByteDance divests TikTok, the app remains a “powerful tool for espionage” and a “potent weapon for covert influence operations.”
Trump’s brief did not voice support for either side, but it did ask the court to oppose banning the platform and allow him to find a political resolution that allows the service to continue while addressing national security concerns.
The short-form video app played a notable role in both Trump and Democratic nominee Kamala Harris’ presidential campaigns in 2024, and it’s one of the most common news sources for younger voters.
In a September Truth Social post, Trump wrote in all caps Americans who want to save TikTok should vote for him. The post was quoted in his amicus brief.
What comes next?
It’s unclear when the Supreme Court will issue its ruling, but the case’s expedited hearing has some predicting that the court could issue a quick ruling.
The case will have “enormous implications” since TikTok’s user base in the U.S. is so large, said Erwin Chemerinsky, dean of Berkeley Law.
“It’s unprecedented for the government to prohibit platforms for speech, especially one so many people use,” Chemerinsky said. “Ultimately, this is a tension between free speech issues on the one hand and claims of national security on the other.”
WATCH: It appears TikTok could really get shut down, says Jim Cramer
Nvidia CEO Jensen Huang speaks about Project Digits personal AI supercomputer for researchers and students during a keynote address at the Consumer Electronics Show (CES) in Las Vegas, Nevada on January 6, 2025. Gadgets, robots and vehicles imbued with artificial intelligence will once again vie for attention at the Consumer Electronics Show, as vendors behind the scenes will seek ways to deal with tariffs threatened by US President-elect Donald Trump. The annual Consumer Electronics Show (CES) opens formally in Las Vegas on January 7, 2025, but preceding days are packed with product announcements. (Photo by Patrick T. Fallon / AFP) (Photo by PATRICK T. FALLON/AFP via Getty Images)
Patrick T. Fallon | Afp | Getty Images
Nvidia CEO Jensen Huang was greeted as a rock star this week CES in Las Vegas, following an artificial intelligence boom that’s made the chipmaker the second most-valuable company in the world.
At his nearly two-hour keynote on Monday kicking off the annual conference, Huang packed a 12,000-seat arena, drawing comparisons to the way Steve Jobs would reveal products at Apple events.
Huang concluded with an Apple-like trick: a surprise product reveal. He presented one of Nvidia’s server racks and, using some stage magic, held up a much smaller version, which looked like a tiny cube of a computer.
“This is an AI supercomputer,” Huang said, while donning an alligator skin leather jacket. “It runs the entire Nvidia AI stack. All of Nvidia’s software runs on this.”
Huang said the computer is called Project Digits and runs off a relative of the Grace Blackwell graphics processing units (GPUs) that are currently powering the most advanced AI server clusters. The GPU is paired with an ARM-based Grace central processing unit (CPU). Nvidia worked with Chinese semiconductor company MediaTek to create the system-on-a chip called GB10.
Formerly known as the Consumer Electronics Show, CES is typically the spot to launch flashy and futuristic consumer gadgets. At this year’s show, which started on Tuesday and wraps up on Friday, several companies announced AI integrations with appliances, laptops and even grills. Other major announcements included a laptop from Lenovo which has a rollable screen that can expand vertically. There were also new robots, including a Roomba competitor with a robotic arm.
Unlike Nvidia’s traditional GPUs for gaming, Project Digits isn’t targeting consumers. instead, it’s aimed at machine learning researchers, smaller companies, and universities that want to developed advanced AI but don’t have the billions of dollars to build massive data centers or buy enough cloud credits.
“There’s a gaping hole for data scientists and ML researchers and who are actively working, who are actively building something,” Huang said. “Maybe you don’t need a giant cluster. You’re just developing the early versions of the model, and you’re iterating constantly. You could do it in the cloud, but it just costs a lot more money.”
The supercomputer will cost about $3,000 when it becomes available in May, Nvidia said, and will be available from the company itself as well as some of its manufacturing partners. Huang said Project Digits is a placeholder name, indicating it may change by the time the computer goes on sale.
“If you have a good name for it, reach out to us,” Huang said.
Diversifying its business
It’s a dramatically different kind of product from the GPUs that have driven Nvidia’s historic boom in the past two years. OpenAI, which launched ChatGPT in late 2022, and other AI model creators like Anthropic have joined with large cloud providers in snapping up Nvidia’s data center GPUs because of their ability to power the most intensive models and computing workloads.
Data center sales accounted for 88% of Nvidia’s $35 billion in revenue in the most recent quarter.
Wall Street is focused on Nvidia’s ability to diversify its business so that it’s less reliant on a handful of customers buying massive AI systems.
The Nvidia Project Digits supercomputer during the 2025 CES event in Las Vegas, Nevada, US, on Wednesday, Jan. 8, 2025.
Bridget Bennett | Bloomberg | Getty Images
“It was a little scary to see Nvidia come out with something so good for so little in price,” Melius Research analyst Ben Reitzes wrote in a note this week. He said Nvidia may have “stolen the show,” due to Project Digits as well other announcements including graphics cards for gaming, new robot chips and a deal with Toyota.
Project Digits, which runs Linux and the same Nvidia software used on the company’s GPU server clusters, represents a huge increase in capabilities for researchers and universities, said David Bader, director of the Institute for Data Science at New Jersey Institute of Technology.
Bader, who has worked on research projects with Nvidia in the past, said the computer appears to be able to handle enough data and information to train the biggest and most cutting-edge models. He told CNBC Anthropic, Google, Amazon and others “would pay $100 million to build a super computer for training” to get a system with these sorts of capabilities.
For $3,000, users can soon get a product they can plug into a standard electrical outlet in their home or office, Bader said. It’s particularly exciting for academics, who have often left for private industry in order to access bigger and more powerful computers, he said.
“Any student who is able to have one of these systems that cost roughly the same as a high-end laptop or gaming laptop, they’ll be able to do the same research and build the same models,” Bader said.
Reitzes said the computer may be Nvidia’s first move into the $50 billion market for PC and laptop chips.
“It’s not too hard to imagine it would be easy to just do it all themselves and allow the system to run Windows someday,” Reitzes wrote. “But I guess they don’t want to step on too many toes.”
Huang didn’t rule out that possibility when asked about it by Wall Street analysts on Tuesday.
He said that MediaTek may be able to sell the GB10 chip to other computer makers in the market. He made sure to leave some mystery in the air.
“Obviously, we have plans,” Huang said.
Alice Weidel, co-leader of the far-right Alternative for Germany (AfD) political party, arrives to speak to the media with AfD co-leader Tino Chrupalla shortly after the AfD leadership confirmed Weidel as the party’s candidate for chancellor on December 07, 2024 in Berlin, Germany.
Maryam Majd | Getty Images
Elon Musk used his social network X to promote Germany’s far-right Alternative for Germany party, known as AfD, hosting a live discussion Thursday with party leader Alice Weidel, a candidate for chancellor, ahead of a general election on Feb. 23.
“I’m really strongly recommending that people vote for AfD,” Musk, who is CEO of Tesla and SpaceX in addition to his role at X, said about a half hour into the conversation. “That’s my strong recommendation.”
The AfD has been classified as a “suspected extremist organization” by German domestic intelligence services. The party’s platform calls for rigid asylum laws, mass deportations, cuts to social and welfare support in Germany, and the reversal of restrictions on combustion engine vehicles.
Thierry Breton, former European Union commissioner for the internal market, said in a Jan. 4 post on X directed at Weidel: “As a European citizen concerned with the proper use of systemic platforms authorized to operate in the EU … especially to protect our democratic rules against illegal or misbehavior during election times, I believe it’s crucial to remind you” that a live discussion on X would give AfD and Weidel “a significant and valuable advantage over your competitors.”
While AfD has amassed about 20% of public support, according to reporting from broadcaster DW, the party is unlikely to form part of a coalition government, as most other parties have vowed not to work with it.
AfD previously protested the build-out of Tesla’s electric vehicle factory outside Berlin, in part because the factory would provide jobs to people who were not German citizens.
Musk’s earlier endorsements of AfD, including tweets complimenting the party and an editorial in a German newspaper, have enraged European government officials. Musk, the wealthiest person in the world, has also endorsed far-right and anti-establishment candidates and causes in the U.K.
Political leaders in France, Germany, Norway and the U.K. denounced his influence, NBC News previously reported, warning that Musk should not involve himself in their countries’ elections.
Musk, who was one of President-elect Donald Trump’s top backers in November’s election, previously promoted Trump in a live-streamed discussion on X. Before that, he hosted a conversation with Florida Gov. Ron DeSantis, who lost to Trump in the Republican primary.
Weidel during Thursday’s talk asked Musk about what Trump might do to bring Russia’s war in Ukraine to a conclusion, as the president-elect has suggested he could quickly do.
Musk demurred.
“To be clear this is up to President Trump, he is commander and chief, so it’s really up to him,” Musk said. “I don’t want to speak for him but you know I do think that there is a path to a resolution but it does require strong leadership in the United States to get this done.”
Musk also weighed in on what he thought should be done in Gaza, which has been under attack from Israel since Hamas’ deadly incursion into Israel on Oct. 7, 2023.
“There’s no choice but to eliminate those who wish to eliminate the state of Israel, you know Hamas essentially,” Musk said. “Then, the second step is to fix the education so that Palestinians are not trained from when they are children to hate and want the death of Israel.”
“Then, the third thing, which is also very important, is to make the Palestinian areas prosperous.”
— CNBC’s Sophie Kiderlin contributed to this report.
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