The collapse of Silicon Valley Bank could cost Roku dearly. Streaming specialist has 25% cash in the bank.
The sudden collapse of Silicon Valley Bank puts more than a quarter of Roku’s cash at risk. The streaming company had $487 million, or 26 % of its cash, in a Silicon Valley bank (SVB), according to a filing with the Securities and Exchange Commission (SEC). The future of these funds remains very uncertain as the federal authorities took control of the financial institution: “Company deposits in SVB are largely uninsured,”Roku writes in its dossier. “At the moment the company does not know what it will be able to get out of this deposited amount in SVB.”
Silicon Valley bank collapse could cost Roku dearly
In a recent statement, the Federal Deposit Insurance Corporation (FDIC) said it will pay “uninsured depositors an advance in the coming days”and that “insured depositors will receive a certificate of ownership for the remaining amount of their uninsured funds. “But there is still a lot of uncertainty about how long this process will take and how much the company will actually be able to recover from these uninsured funds.
However, Roku’s situation, at least for now, is much better than many of the smaller startups that have used Silicon Valley Bank and are now unable to pay their bills and pay their employees.
In its SEC filing, the company said it has more than $1 billion in cash at many other banks. “As outlined on our 8-K form, we expect Roku’s ability to continue operating and fulfill its contractual obligations will not be affected, and we continue to have access to $1.4 billion in cash and cash equivalents that are spread across several major financial institutions,”the post reads. This was stated by a representative of Roku in a statement to Engadget.
Streaming specialist has 25% cash in the bank.
The Silicon Valley Bank was a very obscure institution until recently, but it had strong partnerships with various startup founders who represented a large portion of its clientele. But as Bloomberg’s Matt Levine explained, the bank’s reliance on fixed-rate assets also made it highly vulnerable to the conditions that led to this situation, after influential venture capitalists urged the founders to withdraw their funds from the institution.
Roku is not the only major public technology company that could be hit hard by the collapse of this bank. Roblox has invested $3 billion, about 5% of its cash, in SVB, the company has revealed to the SEC. “Regardless of the completion and timing of all of this, this situation will not affect the day-to-day operations of the business,” she wrote in a statement. Meanwhile, video service Vimeo said it had “less than $250,000″in the bank.