Pentagon Mobilized to Support Tech Startups After Bank Failure

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In the hours after Silicon Valley Bank collapsed on March 10, Pentagon officials who work directly with startups that develop national-security technologies grew increasingly concerned.

Would startups that had money in the bank need to stop work? If that happened, would there be supply-chain disruptions? Would a company under financial stress put its intellectual property at risk?

Officials prepared different courses of action to get cash to companies, if needed.

“It was a busy weekend, for sure,” Michael Madsen, acting director of the organization that acts as conduit between startups and the military, said Tuesday at a Reagan Institute event in Washington.

No immediate action was needed. The Treasury Department stepped in on Sunday and said depositors with funds at Silicon Valley Bank would have access to their money.

“You know, I don’t think it’s a big concern of ours yet,” Pentagon Comptroller Mike McCord told reporters Wednesday on the sidelines of the McAleese and Associations Defense Programs conference.

Had the Biden administration not acted quickly to back up account holder funds at SVB, the United States—and the national-security community in particular—would have faced a major challenge in supporting and growing innovative new technologies, Michael Brown, a venture partner at Shield Capital and former head of the Defense Department’s Defense Innovation Unit, told Defense One.