The California wine industry is on the brink of a financial crisis following the collapse of Silicon Valley Bank.
The bank had been the primary financial institution for the warehouse bank in the Golden State for nearly three decades.
The California Department of Financial Protection and Innovation closed the bank on Friday after a run on venture capital clients.
On Friday night, thousands of wineries discovered that their accounts were completely blocked with no clear timeline for when they would be able to access their funds.
Kendra Kawala, co-founder of Maker, a Bay Area canned wine company, called the news “jarring” and noted that Silicon Valley Bank was “the gold standard within the wine industry.”
California’s wine industry is on the brink of a financial crisis following the collapse of Silicon Valley Bank, including Maker, which makes canned wine.
Kendra Kawala, co-founder of Maker, a Bay Area canned wine company, called Silicon Valley Bank “the gold standard in the wine industry.”
Bodegas accounted for 2 percent of the bank’s total lending business, but the ramifications are far-reaching, including the inability to pay employees, bills or credit card payments. Pictured are rows of grape vines growing in a vineyard in Napa, California (file photo)
When he founded Maker four years ago, choosing the right banking partner was almost a no-brainer.
“Technology and venture firms are well capitalized, but this could be a really serious reckoning for independent wineries,” Kawala said. ‘We have never experienced anything like this. Nobody knows how it will develop.
Bodegas accounted for 2 percent of the bank’s total lending business, but the ramifications are far-reaching, including the inability to pay employees, bills or credit card payments.
Silicon Valley Bank, the 16th largest bank in the country, has provided more than $4 billion in loans to wineries and vineyards since 1994.
“Technology and venture firms are well capitalized, but this could be a really serious reckoning for independent wineries,” said Kawala, right. ‘We have never experienced anything like this. Nobody knows how it will develop.
Maker Wines founder Kendra Kawala is seen on the far right with Chris Christensen, center, as part of the company’s quality control.
Rob McMillan, working for SVB, would write the annual state of the wine industry report for the bank that wineries would depend on for their own business prospects.
The bank provided financing for everything from the acquisition of vineyards, to the purchase of real estate and equipment, and was considered a thought leader in the industry and would issue an annual report on the state of the wine industry.
“A lot of our business assets are tied up in inventory,” said Jasmine Hirsch, winemaker and general manager of Hirsch Vineyards in Sonoma County. San Francisco Chronicle. And who understands wine inventory? How do you value it? How can you borrow against it if you don’t know how to value it?
Silicon Valley Bank’s wine division founder Rob McMillan, who would write the annual reports, has so far refused to comment on the situation, but has built the bank’s reputation as one of the few institutions that truly understands the industry. Of the wine.
The data collected by the bank was a data source that wineries would use to make decisions about future sales, marketing, and agriculture.
The bank had a unique perspective on the industry because of the number of clients it helped finance.
The loss of the annual report in particular means that wineries will not have access to the comprehensive analysis that many used to make their decisions.
On Friday, the Federal Deposit Insurance Corporation, Santa Clara National Bank, created a new bank, which will hold Silicon Valley Bank’s remaining deposits and assets.
But only accounts containing $250,000 or less are FDIC insured.