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Bank Shot

Bank Shot

If you’ve been following the news recently, you’ve probably heard about the woes surrounding Silicon Valley Bank (SVB) and its ultimate demise due to poor management.

Not exactly a security topic strictly speaking, but the minute I heard about it my mind wandered to who was getting stung by the collapse of the financial institution. At first, I didn’t turn up much of interest to me personally, but then I saw it. Latch Inc., the deeply embattled residential security platform, was among the many unfortunate companies that trusted their money to SVB.  

We haven’t talked about Latch in a while really. Last time I wrote an article about them was due to another round of layoffs at the company. More recently you’ll find they’re being sued by maybe everyone under the sun for reasons stemming from securities fraud after the company misrepresented their finances last year. Now the company has put out a statement affirming they did have some assets with the bank, a total of $61.4 million in a custodial account held by U.S. Bank with investment management services from SVB. Latch also had deposits in various accounts with SVB of about $3.1 million.

It's not an inconsiderable amount of money for a company whose total cash equivalents is roughly $215.4 million (well so they say, numbers from them are sketchy at best at this point). Latch represents a more traditional side of the security industry (sort of), and this is a good cautionary tale to be careful where you put your money (also bank deregulation). I fear however the real losers in this collapse are going to be the cybersecurity tech startups that counted on SVB for lines of credit. With them gone prospective new cybersecurity companies will have an uphill battle to secure the capital they need.

It's a lose/lose scenario for everyone with the outcome of this. If you want to look at it from a pool analogy, we’d call this one a scratch.


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