Roku says it could lose 25 percent of its cash after Silicon Valley Bank fails
The sudden collapse of Silicon Valley Bank has put more than a quarter of Roku’s cash at risk. The streaming company had $487 million, which represented 26 percent of its cash, in Silicon Valley Bank, the company disclosed in an SEC filing on Friday.
The future of those funds is now uncertain as federal regulators have taken over the financial institution amid the second largest banking collapse in US history. “The company’s deposits with SVB are largely uninsured,” Roku wrote in its filing. “At this time, the company does not know to what extent the company will be able to recover cash on deposit with SVB.”[ads1];
In a statement on Friday, the Federal Deposit Insurance Corporation (FDIC) said it will pay “uninsured depositors an advance dividend within the next week” and that “uninsured depositors will receive a receipt for the remaining amount of their uninsured funds.” But there is still much uncertainty about how long that process will take to play out, and how much of their uninsured fund companies will ultimately be able to recover.
However, Roku’s situation, at least for now, is much less dire than many of the smaller startups that relied on Silicon Valley Bank, some of which are now unable to pay their bills or their employees.
In its SEC filing, the company noted that it has more than $1 billion in cash in several other banks. “As stated in our 8-K, we expect that Roku’s ability to operate and meet its contractual obligations will not be affected, and we continue to have access to $1.4 billion in cash and cash equivalents that are distributed among several, major financial institutions,” a Roku spokesperson said in a statement to Engadget.
While previously a little-known institution, Silicon Valley Bank was known for its close relationships with startup founders, who made up much of its clientele. But like Bloomberg’s Matt Levine explains that the bank’s reliance on fixed-income assets also made it uniquely vulnerable to the conditions that ultimately led to a run on the bank Thursday after prominent venture capitalists urged founders to move their money out of the institution.
Roku isn’t the only major public technology company now facing losses as a result of the bank’s collapse. Roblox had $3 billion, about 5 percent of its cash, in Silicon Valley Bank, the company told the SEC. “Regardless of the final outcome and timing, this situation will have no impact on the day-to-day operations of the company,” it said in a filing. Video service Vimeo also revealed it had “less than $250,000” with the bank.
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