The collapse of Silicon Valley Bank raised concerns about the impact on national-security technology startups and highlighted an opportunity for the Defense Department to bridge the financing gap between prototyping and production.
Pentagon officials expressed concern about the impact of Silicon Valley Bank’s collapse on national-security technology startups. Officials feared that startups with funds in the bank would have to halt their work, causing supply-chain disruptions and putting intellectual property at risk. The Treasury Department stepped in on Sunday and stated that depositors with funds at Silicon Valley Bank would have access to their money. Had the bank collapsed, it would have had significant implications for national security and innovative technologies. It would have been a huge blow to the startup ecosystem, and China and Russia would have been pleased to see so many companies fail. The Pentagon has a gap in fielding innovative technologies quickly, so it needs to buy lots of small things, which the commercial sector provides. The SVB collapse presents an opportunity for the Defense Department to find new forms of financing that bridge the gap between prototyping and production.