Founders are starting to worry about whether startups will be able to keep paying employees following the failure of Silicon Valley Bank.
One payroll service provider Rippling notified customers on Friday that some payroll processing had stalled because SVB helped process its payments. The company switched to JPMorgan Chase, but not soon enough: Paychecks were already "in flight" with SVB and have yet to be paid out — and the firm is still trying to understand what the bank's failure on Friday will mean for them, Rippling Chief Executive Officer Parker Conrad said in a Twitter post.
We (Rippling) discovered yesterday that Silicon Valley Bank had unexpected solvency challenges. Just now, we learned that the FDIC had stepped in and effectively shut down SVB.
— Parker Conrad (@parkerconrad) March 10, 2023
Startup founder Brad Hargreaves said some firms may not be able to make payroll next week. And because boards are incredibly sensitive to employing workers they can't pay, he said, "Expect mass layoffs later today, Monday at latest."
Now they may not be able to make payroll next week. Unpaid wages pierce the corporate veil, so boards are *incredibly* sensitive to employing workers they may not be able to pay.
— Brad Hargreaves (@bhargreaves) March 10, 2023
Expect mass layoffs later today, Monday at latest.
