Several companies from the entertainment industry will be affected by Silicon Valley Bank's collapse, as many of them had existing accounts at the bank. This includes streaming company Roku which had nearly $500 million of its cash put at risk.
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SAN JOSE, CALIFORNIA - NOVEMBER 18: Roku's company logo is seen in front of Roku headquarters on November 18, 2022 in San Jose, California. Roku announced plans to lay off 200 employees in the United States, or nearly 7 percent of its workforce.
Roku's Potential Cash Loss
During a filing with the Securities and Exchange Commission, Roku disclosed that the company has $487 million of cash and cash equivalents in uninsured deposits at failed Silicon Valley Bank. Engadget reported that this represents 26% of the company's cash.
Because of the bank's collapse, the future of the company's mentioned funds is now uncertain as federal regulations took over the financial institution amid the second-largest bank collapse in the history of the United States.
"The Company's deposits with SVB are largely uninsured. At this time, the Company does not know to what extent the Company will be able to recover its cash on deposit at SVB," Roku noted in its filing.
The Federal Deposit Insurance Corporation (FDIC) released a statement on Friday and said that it will pay the uninsured depositors an advance dividend within the next week and will receive a receivership certificate for the remaining amount of their uninsured funds. However, CNBC reported that the insurance only covers the first $250,000 in deposit accounts.
Companies and depositors are still uncertain regarding how long will take the process and how much amount will be recovered. Roku's case is a lot less bad than other smaller startup companies that relied on the banks, which some of them rely upon to pay their bills and employees.
Roku has $1.4 billion in cash and cash equivalents deposited across multiple, large financial institutions. The company's spokesperson stated that the company hopes that its ability to operate and meet its contractual obligation will continue and not be impacted by this problem for the next twelve months and beyond.
Also Read: Roku Confirms Smart TV Lineup Alongside its Streaming Ventures-Here's What to Expect
Silicon Valley's Collapse
The New York Times reported that FDIC took control of Silicon Valley Bank's customer deposits, which costs $175 billion. However, customers have not received any information on whether they will regain their money beyond the $250,000 insurance.
Along with Roku, this affected several companies like CompScience, which is a workplace safety analytics startup. Chief Executive Officer Josh Butler stated that he was unable to get the company's cash and cash equivalents on Thursday before the announced collapse on Friday.
"Everyone from my investors to employees to my own mother is reaching out to ask what's going on. The big question is how soon will we be able to get access to the rest of the funds, and how much if at all? That's absolutely scary," he noted.
Roblox also had about 5% of its cash holding at the bank which totaled about $150 million. As per The Hollywood Reporter, the company stated that this situation will not have an impact on the company's operation regardless of the outcome and the timing.
Related Article: VCs Urge Silicon Valley Bank Investors To Withdraw Funds After Shares Plunge
