Add Healthcare to the SVB Collapse's List of Victims

Healthcare innovation – just when many need it most – is another detriment of the Silicon Valley Bank collapse, writes Colliers’ Shawn Janus.

Start-ups, employees, and patients have been temporarily deterred due to the $175 billion in customer deposits now under the control of the Federal Deposit Insurance Corporation (FDIC), an independent government agency in charge of banking and consumer safety.

While the process pays out, potential longer-term damage is possible, according to Janus.

Start-Ups: The dearth of venture capital funds means that many healthcare start-ups may be forced to halt their pursuit of groundbreaking research and development projects.

“Those projects have the potential to transform the industry and it’s likely that many of them could be abandoned, leading to a stagnation of innovation in the healthcare space,” writes Janus.

Employees: The healthcare industry has been plagued by years of labor shortages and the loss of SVB means that many of the start-ups it supported will have to render hundreds, if not thousands, of layoffs of people in research and development, manufacturing, and distribution roles or shut down altogether.

That’s not to mention how these companies’ financial capacity will suffer, hindering their ability to pay invoices and make payroll.

Patients: The SVB collapse is also taking critical research and development of digital advancements used in hospitals and clinics down with it. Patients who rely on new medical technologies to treat a wide range of conditions could be left short-changed.

Alison Flynn Gaffney, president, Healthcare Division, JLL, tells GlobeSt.com that while the healthcare industry is continuing to navigate coming out of the pandemic, workforce shortages, and overall financial constraints, the impact of the current banking crisis is now added to every CEO’s daily concern.

“Healthcare is an industry of innovation, and that innovation is funded in myriad ways – only one of them being investment and capital dollars to support the industry’s research, academic endeavors, technology, and clinical trials that can lead to lifesaving and improving-of-life cures,” Gaffney said.

“There needs to be thoughtful attention to how future dollars are spent and on planning focused on not losing momentum within the health sciences investments arena, along with retention of scientists and team members.”

Start-Ups SVB Funding Still Comes Through

Start-up firm TippingPoint Biosciences, LLC has been able to maintain its work in chromatin biology with the intent to cure diseases. It was directly affected by the SVB collapse but has shown resiliency and remained patient while accessing its funding from SVB, which was insured, and never let the situation stunt its growth, Laura Hsieh, PhD, CEO & founder of TippingPoint Biosciences, tells GlobeSt.com.

Funding is a key component of modern medicine and is required to drive innovation that improves patient care.

“Despite the very real impact of the collapse, startups such as ours prove these hurdles won’t stop progress in the field,” Hsieh said.