CIOs seek sustainable solutions in the wake of Silicon Valley Bank’s collapse

With the recent collapse of one of the primary sources for Venture Capital funds, some in the digital healthcare space are wondering how this will impact startup funding for innovative solutions to current healthcare challenges. This Spring, CHIME’s Sustainable Innovation Summit (May 3-5) will bring CHIME Members together to identify innovative solutions that rely more on “efficiency” and “sustaining” innovation than on startups who might be affected by such a financial tidal wave. 

Silicon Valley Bank (SVB) was one of the largest and most influential financial institutions in the US, especially for the healthcare sector. It provided loans, banking services, and venture capital to thousands of digital health and biotech firms, many of which are developing innovative solutions to common healthcare problems. However, on March 9, 2023, SVB experienced a historic bank run that led to its failure and seizure by the Federal Deposit Insurance Corporation (FDIC). 

The collapse of SVB has sent shockwaves across the healthcare industry, as many startups and emerging companies face uncertainty and disruption in their access to capital and cash flow. According to industry stakeholders, SVB’s failure will slow down innovation and make an already risk-averse industry even more so. Some of the potential impacts include: 

• Delayed or canceled clinical trials, product launches, and research projects due to lack of funding or payment difficulties. 
• Reduced investment activity and valuation for digital health and biotech companies, as investors become more cautious and selective. 
• Increased competition and consolidation among healthcare companies, as some may struggle to survive or seek mergers and acquisitions. 
• Loss of talent and expertise, as some employees may leave or be laid off by affected companies. 

While the FDIC is looking for a buyer for SVB, it is unclear whether the new owner will be able to maintain SVB’s unique role and relationship with the healthcare sector. Some experts suggest that an institution like SVB is needed to fund digital health innovators, especially in areas such as artificial intelligence, telehealth, genomics, and precision medicine. 

The failure of SVB is not only a financial crisis but also a potential setback for healthcare innovation. It could affect the development and adoption of new technologies that could improve health outcomes, lower costs, and increase access for millions of Americans. As such, it is imperative that the healthcare industry finds ways to overcome this challenge and continue to support innovation.  

By focusing on Sustainable Innovation in a time of tighter budgets and financial uncertainty for VCs and startups, CHIME hopes to leverage the thought leadership of its members to offset these setbacks and plan for better days ahead. 

Building on extensive experience in the fields of journalism, media production, and learning design and development, John Marc Green’s newest adventure is serving as Director of CHIME Innovation. In this role, his ongoing conversations with CHIME Members and Partners provide insights and direction to serve their interests in a variety of ways, including digital healthcare innovation journalism, professional development events and program facilitation, and on-demand educational development through CHIME Innovation.