Local startups jolted by bank collapse
Local startups jolted by bank collapse
Plus: Harris Teeter modernizes logo; South Charlotte I-485 interchange to honor longtime real estate exec; Zoning panel gives 👍 to SouthPark development; 'Chair monster' in uptown
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Regulators cite ‘systemic risk’ as they move to strengthen banking sector after Silicon Valley Bank failure; sleepless nights for local pharma CEO
A Silicon Valley Bank branch at its headquarters in Santa Clara, Calif. The bank was closed by regulators on Friday after startups and tech companies pulled out billions over concerns about its financial stability — an episode that highlighted fragility in the U.S. banking system. (Shutterstock photo)
by Tony Mecia
Sitting in a Starbucks in Cornelius on Friday, Scott Keadle was working on a pitch deck for his young pharmaceutical company when he got a text message from his chief financial officer: “Have you seen this?”
Attached was a link to an article about Silicon Valley Bank, where Keadle’s company, Balanced Pharma, had several hundred thousand dollars. Balanced Pharma has completed two stages of fundraising and has plans to raise more money to start manufacturing an anesthetic that makes dental injections less painful and more effective.
Keadle had not seen the fast-developing news about the bank. Over the previous couple days, bank customers — largely startups and tech firms — became worried about its finances and started withdrawing their deposits, starting a bank run that led regulators to seize control of the bank around midday Friday.
Upon hearing the news, Keadle logged onto Silicon Valley Bank’s website. “I just acted as fast as I could to try to get the money out,” he said. The site said “in processing.” The website later stopped working. The money didn’t arrive, and he worried Balanced Pharma could be out several hundred thousand dollars, the amount above the $250,000 that’s federally insured. He had trouble sleeping Friday and Saturday nights, he said.
Frantic scenes like that played out late last week around Charlotte and around the country, as entrepreneurs with links to Silicon Valley Bank sought answers for what would happen to their money and their companies — and whether the collapse of the country’s 16th-largest bank, the second-largest bank failure in U.S. history, has any greater significance to the economy.
Stories of panicked depositors withdrawing billions from their bank, forcing regulators to shut it down — all that threw off some serious 2008 financial crisis vibes on Friday and over the weekend. You might recall that the nation’s largest bank failure, of Washington Mutual in 2008, contributed to the forced sale of Charlotte-based Wachovia just a few days later.
‘Systemic risk’ to banking system: On Sunday night, the federal government announced that because of “systemic risk” posed by the failure of Silicon Valley Bank and another bank — Signature Bank of New York, which regulators closed on Sunday — it was taking steps to shore up the nation’s banking system. Depositors at the two banks will have access to all their money beginning today, and the government will work to make sure other banks have enough available money to weather large-scale withdrawals.
The optimistic view would be that Silicon Valley Bank’s collapse is an outlier, the result of an unusually concentrated reliance on startups and tech companies, which have been cutting back and burning through cash as new funding has dried up. And banks are generally more sturdy than they were when the last financial crisis hit.
The pessimistic view would be that it’s a sign that the economy is moving into a more troublesome phase in which slowdowns that have been mostly confined to real estate and tech are spilling over into banking and to other parts of the economy. And as that happens, will it weigh on consumer spending and drag the economy into the recession that economists have been predicting for months?
The immediate effect on Charlotte could be relatively minimal. Silicon Valley Bank’s investment banking arm, SVB Securities, received a building permit in December to expand at The Line office tower in South End, The Ledger first reported in January. Bloomberg News reported over the weekend that SVB Securities’ managers are exploring ways to buy the division from its parent company, and that the head of the unit released a statement saying: “SVB Securities is financially stable and will continue to operate as usual.”
Signature Bank has an office at 121 West Trade uptown, according to its website.
In addition, Charlotte has a smaller startup scene than other cities, and local startup investors told The Ledger this weekend that while they knew of companies that banked with Silicon Valley Bank, many local startups did not.
“I'm guessing it’s far fewer companies in Charlotte that bank at Silicon Valley Bank than it would be in the Triangle,” said Greg Brown, administrator of the Charlotte Angel Fund, which invests in early-stage companies in the Charlotte region. He examined the investments the fund has made, and of the 30+ in its portfolio, two had the money wired to Silicon Valley Bank. The business publication Triangle Inno on Friday reported several ties to the bank from Triangle-area venture capital firms and tech startups.
Future of banking? The bigger questions now might have to do with the effect on banking, Charlotte’s signature industry, of several high-profile bank collapses and the responses by regulators. Big banks could benefit from more deposits if customers pull money from smaller regional banks or ones with less-diversified customers bases. It was a rough week for bank stocks: Bank of America’s stock fell 11% last week, Wells Fargo’s stock was down 12% and Truist’s fell 16%.
After the news came Sunday night that Silicon Valley Bank customers would have all their money returned, Keadle said he was relieved — though he figures servers will crash as many people move money around.
“My company is going to be fine,” he said. “But systemically, there’s a problem out there, for sure. How’s that going to end for everybody?”
It might be an interesting week.
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SVB’s chief diversity officer lives in Charlotte
One more Charlotte tie: Silicon Valley Bank’s website says the company’s Chief Diversity, Equity & Inclusion Officer, Angela Morris Lovelace, lives in Charlotte with her husband and two sons. She joined the bank “after spending 16 years at Bank of America, where she served in various leadership roles in Human Resources, DEI and Information Security,” her bio says.
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Related Ledger article:
“Understanding Charlotte’s tech industry” (Nov. 28, 2022 — 🎧 also as a podcast)
Harris Teeter rolls out new logo and slogan: ‘In Food With Love’; called ‘a succinct expression of who we are’
New corporate logos are always fun to debate, and now Harris Teeter is joining the fray with a logo that has a more modern look.
It appears to us as though the Matthews-based grocer is filling in the fish, apple and loaf of bread, changing the color from a bright red to maroon and altering the font to a sans serif style (no little tails on the ends of the letters). The company is also rolling out a new slogan: “In Food With Love.”
Say goodbye to the bright red and bubbly lettering of Harris Teeter’s old logo. It’s being replaced with the “modernized and refreshed” logo on the right in ads and in stores.
Company execs shed some light on the move in an interview with trade publication The Shelby Report, which tells us that “the updated logo, tagline and campaign highlights the company’s commitment to adapt to changes in the grocery industry and the evolving needs of its customers.”
It quoted vice president of marketing Matt Martin as saying: “At Harris Teeter, we’ve always been in love with every aspect of the food business, from supporting our associates to giving back to our local communities to providing the best selection of premium items at a great value. Our modernized and refreshed logo, along with our new tagline and marketing campaign, [is] a succinct expression of who we are and what we aspire to be.”
The new logo and tagline were introduced March 1 on social media and in digital ads, and a TV ad campaign started last week. They’ll be in stores in the coming months and “eventually” on storefronts, the publication said.
Harris Teeter is owned by Cincinnati-based Kroger. —TM
South Charlotte I-485 interchange to be named after longtime real estate exec
Ned Curran, the former CEO of The Bissell Cos., has been involved in real estate and road planning in Charlotte for decades.
And for someone like that, is there a higher honor than … having an I-485 interchange named after you?
The City Council is scheduled to vote tonight on a resolution “supporting the Edward L. (Ned) Curran Designation of the Interstate 485/Weddington Road Interchange.”
The resolution notes that Curran’s career in accounting and commercial real estate “spanned nearly five decades with a passion for public service that has delivered more equitably inclusive communities within an innovative transportation network.” The Bissell Cos. was the original developer of Ballantyne, and Curran is the former chair of the Charlotte Chamber and served on the state transportation board and many other local boards and commissions.
Reached Friday, Curran told The Ledger: “It’s humbling. It’s a nice recognition.” And he joked: “It’s nice that it’s happening while I’m alive!” —TM
Uh-oh, there’s a monster uptown — a ‘Chair Monster’
A new bright yellow sculpture has been installed in First Ward Park uptown. It is called “Chair Monster” and was designed by local architect and artist David Furman, says Moira Quinn of Charlotte Center City Partners. It was fabricated by ASCM Design + Build and made possible because of a grant from U.S. Bank. The 60-foot-long sculpture, composed of 100 wooden chair frames, will be dedicated next month at the Charlotte Shout festival. It’s the first piece of art along the rail trail on the north side of uptown.
You might be interested in these Charlotte events
Events submitted by readers to The Ledger’s events board:
SATURDAY: TreesCharlotte Tree Adoption. 8:30-11:30 a.m. City of Charlotte Landscape Management, 701 Tuckaseegee Road. TreesCharlotte will provide more than 800 free trees to Charlotteans. Charlotte residents are invited to register for and pick up two free trees and mulch, as well as receive instruction on planting techniques and best practices for caring for trees. Registration required; starts March 13 at 10 a.m.
◼️ Check out the full Ledger events board.
➡️ List your event on the Ledger events board.
Charlotte Ledger Month: You Ask, We Answer – The Ledger’s free vs. paid subscriptions
The Ledger has been sharing details about our operation this month, as we push to get to 2,500 paying subscribers by the end of March. Last week, we had a couple readers who asked about our number of free vs. paid subscribers.
One wrote:
I was not aware of the number of subscribers relative to paid subscribers. I think this is a good number to keep in front of us. … I would appreciate knowing about the ongoing growth of the Ledger, since we are all invested with you, in its success. I also think knowing how many subscribers are actually paying makes a difference.
Another wrote: “Are you saying you have 14,508 unpaid subscribers?”
We wrote that we have nearly 17,000 total email subscribers (free and paid), and that we are approaching 2,500 paying subscriber accounts. As is the case with newsletters like ours, which have free and paid versions, the number of people on our free list greatly outpaces the number of paying subscribers. People on the free plan receive about half the number of articles that paying subscribers do.
As of Friday, The Ledger had:
2,424 paying subscriber accounts
841 email addresses that are “comps” — people who receive the paid version because they are attached to someone with an annual plan ($99, +1 email address) or a Premium plan ($379, +5 email addresses)
9 people who receive the paid version because someone gave it to them as a gift
13,599 who receive the free version
In other words, about 19% of the email addresses we have receive our paid version, and 81% receive the free version. That’s actually a much higher percentage receiving the paid version than most other Substack newsletters, which average in the 5%-10% range.
We surveyed free readers last year. When asked why they don’t pay to subscribe, the most common reason cited was “I’m satisfied with the information I get from other sources.”
Some paying members have suggested that we push harder to convert the free folks to paying subscribers. Some have even suggested booting them from receiving emails from us entirely after a certain amount of time (a Substack newsletter in South Carolina tried this last year, with some success). We make sure our free readers know their options and why we think they should join us, though we wouldn’t characterize our conversion efforts as relentless or annoying.
We don’t view this as a “free rider” problem, because paying members receive tangible benefits for paying, in the form of additional high-quality articles, invitations to members-only events and so on. And our free readers often help us grow by sharing our articles with friends.
Our records show that we have 2,830 people on our free list who have opened almost all of our free-version newsletters for at least the last six months yet don’t pay to become Ledger members. If all of those people became members today, we could easily afford to hire several full-time reporters.
We have a lot of smart people who read this newsletter. What would you do if you were us? Send us an email or leave a response in the comments (paying members only). —TM
In brief:
Panel gives thumbs-up to SouthPark development: An citizens advisory committee voted last week to recommend approval of a rezoning on Colony Road in SouthPark that would include 730 apartments. The vote by the Zoning Committee improves the odds that the City Council will approve the project by The Related Group on the site of the Trianon condos. While the condo owners support the sale, some nearby residents have expressed worries about building heights and the effect on traffic.
CATS official placed on leave: The No. 2-ranking official at the Charlotte Area Transit System (CATS) was placed on administrative leave without pay last week. A CATS spokesman did not provide details of why Allen Smith was placed on leave or what the future of the position is. (WBTV)
Tar Heel season ends: UNC Chapel Hill was not selected for the NCAA men’s basketball tournament and said it turned down an invitation to the less prestigious National Invitation Tournament (NIT).
Paying for Saturday parking: Starting March 25, street parking uptown and in South End will cost money on Saturdays, the city says. The city says adding paid parking at metered spaces on Saturdays “will provide better access to uptown and South End businesses and venues by allowing parking turnover on this high-demand day.” (Charlotte Department of Transportation)
Basketball champs: Myers Park High won its first-ever state title in boys basketball on Saturday, defeating Richmond County 74-60. (Observer)
Republican infighting on Medicaid expansion: Although Republican legislative leaders in Raleigh favor expanding Medicaid, not all Republican legislators are on board. One Republican operative told North State Journal: “To completely reverse course (on expansion) isn’t just an embarrassing flip-flop with no explanation, it’s completely antithetical to Republicans’ limited-government mission.” (North State Journal)
Record-breaking home sale: An Asheville mansion sold last week for $9.6M, the highest price for a single-family house ever recorded in the 23 counties served by Canopy MLS. The 9,500 s.f. mansion has 5 bedrooms and 5 ½ baths as well as an “ultimate man cave” with a golf simulator room. (Biz Journal, subscriber-only)
Taking stock
Unless you are a day trader, checking your stocks daily is unhealthy. So how about weekly? How local stocks of note fared last week (through Friday’s close), and year to date:
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Executive editor: Tony Mecia; Managing editor: Cristina Bolling; Staff writer: Lindsey Banks; Contributing editor: Tim Whitmire, CXN Advisory; Contributing photographer/videographer: Kevin Young, The 5 and 2 Project