The technology industry got what it wanted Sunday when the federal government announced it would make sure Silicon Valley Bank depositors got all their funds back after a run that crippled the institution. Now, tech people are discovering the price the sector will have to pay in return, including a damaged reputation, political anger and wounded pride.

Tech employees, startup executives and wealthy investors brace for a potential reckoning after the Biden administration guaranteed that SVB depositors would be able to access all of their funds, even above the Federal Corporation’s guaranteed amount. of Deposit Insurance of $250,000.

The need for emergency government action was the latest black eye for an industry whose reputation has taken repeated hits in recent years, and goes against the anti-government, anti-regulation ethos that many tech investors have preached.

Billionaire venture capitalists like Peter Thiel have faced accusations that they hastened the crisis by advising startups last week to withdraw money from the bankwhile other tech figures have faced charges of hypocrisy for opposing government action for others and then demanding quick help for themselves.

Margaret O’Mara, a historian of the technology industry and a professor at the University of Washington, said that after years of scrutiny by politicians and regulators, many people in Silicon Valley thought they were owed a bailout.

“There’s this kind of defensiveness: ‘Look, we’re this innovation economy and we’ve contributed a lot, and there’s no question this needs to be addressed,’” he said.

Potential consequences could include new regulations, class action lawsuits suits and more reputation damage for an industry that’s had a lot, all on top of technology-disrupting mass layoffs companies.

David Sacks, an investor and frequent critic of the Biden administration who was among the loudest voices online Urgent help for the technology industry., he defended himself this week, saying he was only reacting to a crisis after it had started. He blamed the crisis of mismanagement in the bank and the increase in interest rates.

“This is shooting the messenger,” he said during an appearance on CNBC on Monday. “We were drawing attention to an issue that needed to be resolved immediately. I think that was constructive.»

While other regional banks are now under scrutiny, SVB was somehow uniquely vulnerable. Founded in 1983 in Northern California, the bank was closely tied to a volatile industry and had operating cash for many unproven startups. An unusually high proportion of their deposits were not insured by federal regulators: about 89% as of December.

Investors and small businesses alike came out in defense of the bank over the weekend, writing letters and signing petitions to Congress, but they couldn’t prevent the collapse.

“Where was someone saying, ‘We know the interest rate environment is going to change. Maybe we should try a different strategy? O’Mara said.

The fact that California’s brightest technical and financial minds did not see trouble coming, let alone stop it, was not lost on many observers, and indeed the bank’s CEO, Greg Becker, had called for more lenient regulations in 2015.

“Our society desperately needs to allow irresponsible and arrogant VCs and techbros to experience genuinely painful consequences for their failures,” Faine Greenwood, data scientist and drone researcher, wrote On twitter.

Some worry that the tech industry isn’t putting out its best spokespersons.

“There are certain voices on social media that are loud and shrill and don’t speak for technology,” Om Malik, a former technology journalist who is now an investor in True Ventures, said in a phone interview.

“All of the real issues that we experienced over the weekend as a community were resolved by people who weren’t on Twitter,” he said. Credit should go to the people who worked behind the scenes, including Silicon Valley Bank’s grassroots employees who have experience in the world of start-ups, she said.

It’s unclear to what extent investors and other tech influencers caused the crisis, but as of Friday morning, several of them were advising companies in their portfolio. to withdraw deposits of SVB, turning the bank run from a threat into a reality.

To some, it was an indictment of the entire culture of Silicon Valley, the geographic region roughly centered on the southwestern shore of San Francisco Bay.

“I don’t know who needs to hear this, but if the richest people in your community start the bank run instead of stepping in to end it, what you have on your hands is not in fact ‘a community,’” EW Niedermeyer, author of a book about Tesla, wrote On twitter.

Philip Rosedale, the founder of the virtual reality platform Second Life, said the bank run was an example of venture capitalists acting out of self-interest and mutual mistrust.

“Imagine if all these venture capitalists had all been in one room,” he said in an interview on the sidelines of South by Southwest, the Austin, Texas, tech conference, as the crisis unfolded.

“Think about what everyone else would have said about the guy who says, ‘I’m telling all my people to withdraw their money right now,’” he said.

By Monday, some venture capitalists had come forward to celebrate the bailout. Ron Conway, a prominent San Francisco venture capitalist, said in an email that his investment firm “was able to leverage its network of business and political/government relationships to seek a positive outcome to help thousands of small business clients of SVB to resume their business as normal. ”

At a dinner Friday in San Francisco, he made his case before former House Speaker Nancy Pelosi and former President Barack Obama, according to the Puck news website, which labelled the ransom «The Ron Conway Ransom».

However, other investors are prepared to reject the criticism. Sriram Krishnan, a general partner at venture capital firm Andreessen Horowitz, said on Twitter that he had noticed in recent days that people were not appreciating the value of the technology industry.

“We need to do a better job of telling our story or our enemies will do it for us,” he said. saying. She did not say who the enemies were and did not respond to an interview request.

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