Slimane Boumedine is the financial director of Physna, a Californian company specializing in 3D research, victim of the bankruptcy of Silicon Valley Bank. This Franco-Algerian, who has been living in the United States for fifteen years, experienced the panic of the tech sector very closely. He delivers a critical analysis of this unprecedented situation.
RFI: What happened to your business on March 8, the day the SVB went bankrupt?
Slimane Boumedine: That morning we were in shock. SVB is one of the banks with which we do our transactions. When we learned that it might be in default, we implemented our internal financial regulation. We were lucky enough to be able to internally transfer all the money that was in the operational account to an account that is not on their balance sheet and which later allowed us to get our money back in a guaranteed way. But there is a fear that has taken hold throughout Silicon Valley.
A word-of-mouth phenomenon between tech companies and with venture capital firms?
Exactly. And the problem is that companies structure their financial services differently. Some believed, rightly or wrongly, that they would be affected, which created a snowball effect. Until Sunday evening the Fed announced its plan, I can tell you that everyone was scared, even me who knew that the way I had structured the financial department allowed us to suffer the minimum impact.
How do you analyze this bankruptcy? Have the risks been underestimated by the SVB?
Looking at the comments from current bank customers, everyone was satisfied with the service and the employees. It is a bank that has understood very well the opportunities and risks that technology entails. We were therefore horrified to discover that the management had mismanaged or badly anticipated the reversal of the Fed on interest rates. This raises another question: will we have a bank ready to venture into this sector and support its companies?
In the United States, there is a bank deposit guarantee agency. Does that reassure you?
Yes and no. As a simple custodian, for myself, $250,000 guaranteed might be enough. Not for businesses. Their needs are much greater. Federal insurance decided that everyone who had deposits, regardless of the amount, would be guaranteed 100%. But until when ? That is the problem. There are many voices that are being raised asking that this ceiling be reassessed for depositors and especially for businesses. This would be the best thing to do because a depositor should not be penalized by a shareholder who voted for management who mismanaged his bank.
Is this a lesson for tech start-ups and investors? Do not put all your eggs in one basket and diversify their deposits?
When I stood in line at the reopening of the SVB, I realized that the majority of start-ups only used one bank and one account, and therefore did not respect the basic financial fundamentals. You have to have several banks, even if it takes time to do the administrative procedures. This is the first thing to do in the event of a problem or if you are in conflict with your bank. We had three.
Are you a little calmer now? Janet Yellen, Secretary of the Treasury, says the situation in the financial sector in the United States has stabilized.
The problem is the emotional depositors. We saw that within a day or two, several major banks stepped in and deposited First Republic with $30 billion to support this bank. If we look simply from an economic point of view, there is no systemic risk in principle. But the emotional is an important factor when touching the wallet. There are large movements of capital. For me, the Fed and the Biden administration should announce that all deposits are guaranteed, regardless of the amount. There needs to be a system in place where the custodian bank and the investment bank keep enough deposits in-house to avoid these future problems.
Last thing: tell us about your personal background. How did you get here?
I did a technological baccalaureate in France, in the suburbs of Metz. I was unemployed, I was a cleaning lady in Luxembourg, finally “cleaner” as they say. This means for young people who come from the suburbs that if they believe in their own destiny and if they work, they can succeed. I have a technological baccalaureate and today, I work for Sequoia Capital, for Tiger Global. And that’s education in France that allowed me. We have a very good education in France, thanks to the teachers who believe in us. Young people need to say to themselves: later, if I want to be something, I can succeed “.
► To read also: Bankruptcy of SVB bank: what impact on African tech?
► To find out more: SVB, Credit Suisse, euro zone: who can save the banks?
(Eco from here eco from elsewhere, broadcasts on Saturdays at 10:10 a.m. UT and at 5:10 p.m. UT)