Silicon Valley Bank's bankruptcy affects the e-commerce industry! Etsy delays payment to sellers!

It is learned that according to foreign media reports, the 40-year-old Silicon Valley Bank went from collapse to bankruptcy in just over 40 hours, becoming the second largest bank bankruptcy in U.S. history, second only to the 2008 financial crisis. The collapse of Silicon Valley Bank caused turmoil in the global financial market and economy.

Founded in 1983, Silicon Valley Bank is the 16th largest bank in the United States. It mainly provides deposit and loan services and equity financing to venture capital institutions (VC) and technology companies. It has always been one of the most popular financial institutions among technology and life science startups, and its clients are mainly venture capital institutions (VC) and technology companies. As of the end of 2022, the bank's total assets were US$209 billion and deposits exceeded US$175 billion.

According to a previous statement from the bank, its clients include Canadian e-commerce company Shopify, US recruitment website ZipRecruiter, venture capital firm Andreessen Horowitz, etc. There is no doubt that the bankruptcy of Silicon Valley Bank may affect many giants.

The first e-commerce company to be affected was Etsy from the United States.

On Friday afternoon, Etsy sellers complained that their payouts, originally scheduled for Friday, March 10, were automatically delayed until Monday. Some began speculating that Etsy might use SVB and that the massive delays were related to a glitch at that bank.

On Friday evening, Etsy sent an email to sellers confirming that their scheduled payouts were being delayed because it was “using SVB to release funds to some sellers.”

Etsy further stated: "We are working with our other payment partners to release your deposit as quickly as possible." The company did not provide any further details, indicating that SVB's collapse will not have a big impact on it.

On Saturday afternoon, Etsy posted an update on its community forums:

“As you may have seen, we have recently experienced delays in our ability to issue payments to some of our sellers. This is related to the rapid and unexpected collapse of Silicon Valley Bank.

“We sincerely apologize for any inconvenience this may cause. Our teams have been working around the clock to implement a solution and ensure sellers are paid via our alternative payment partners over the next few business days.

"We're committed to helping you run your business - and delivering a reliable experience is an important part of that commitment. Our team is working tirelessly to minimize future disruptions and continue to serve you to the best of our ability."

It’s worth noting that while affected sellers said their new payment information date was showing as March 13, Etsy’s email did not mention a specific date.

According to Etsy’s statement on Saturday, it appears that payments may be delayed for several more business days after Monday until the company can arrange an alternative payment solution through its other partners.

As of the end of 2022, the company had $1.2 billion in cash, cash equivalents, and short-term and long-term investments. Of this, $921 million was cash and cash equivalents. In addition, Etsy has a $200 million revolving credit line (credit line), which will still be fully available at the end of the year.

Obviously, without knowing how much impact the SVB explosion will have, Etsy should have sufficient financial resources to pay sellers because the company's financial situation in 2022 is better than that of its peers.

It’s also possible that Etsy did not receive funds directly from SVB, but did so through its payment partners, which could also be the reason for the delay in payment to Etsy sellers, the report said.

Another good sign for sellers was that the company's shares remained stable in after-hours trading, further suggesting that the turmoil on Wall Street may not have a big impact on Etsy.

Editor ✎ Nicole/

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