The explosive demise of Silicon Valley Bank (SVB) has left a soap opera trail of insight ripe for a documentary, but more strategically could shift how venture capital firms and startups in the cloud, cybersecurity, and software space manage money.

SVB was an integral part of the VC and startup economy. Garry Tan, CEO for early stage startup incubator Y Combinator, noted on Twitter that “thousands of US startups” banked through SVB.

That number sounds hyperbolic but is likely not far from reality. Forrester Research cited SVB’s own data that it banked 55% of venture-backed tech and health care IPOs from 2021.

Gartner this week conducted a survey of more than 250 corporate leadership, like, CFOs tied to the SVB situation. It showed that 85% of leaders expressed concern over an impact on their operations, while 18% noted some level of exposure to one of the failed banks.

The survey also found some companies had up to 25% of their cash reserves in a failed bank. Forrester Research noted Canadian adtech firm AcuityAds had more than 90% of its cash in SVB.

Government action has eliminated immediate financial concerns but could impact future leadership decisions.

“It’s way too soon to tell,” Keith Johnston, VP and group research director at Forrester Research, noted in an email to SDxCentral. “Right now, the government is in no rush to sell SVB or let a big bank get bigger – not that there aren’t bidders. It has heightened the dialogue around the government’s role with venture-heavy banks moving forward.”

Gartner’s survey results were top-heavy in the need for better education and assessment, though 28% of CFOs surveyed did say they plan to spread their loot around to more banks.

“The data shows that CFOs are clearly concerned about second and third-order effects from this unfolding banking crisis,” Alexander Bant, chief of research in Gartner’s Finance practice, wrote about the analyst firm’s survey. “While the immediate risks may have been stemmed by swift government action, CFOs are rightly assessing potential impacts to their own funding and that of their customers and suppliers. … CFOs have a short window to ensure security of their assets, payments, and funding in case things deteriorate further across the banking sector.”

Forrester Research added that there could be a bigger shift toward more established banks that down the road would fit into the controversial “too big to fail” mold. Johnston noted this could lead to “deliberate diversification of where and how they manage funds.”

However, some have warned that this could drain innovation from the tech sector. SVB, for all of its decision-making faults, was a valuable ally to the space and had a pulse on the needs of the community.

“Sure, they can all bank elsewhere, and that’ll be fine,” Derek Kerton, principal analyst at Silicon Valley-based The Kerton Group, wrote to SDxCentral in an email. “For startups, losing SVB is a bit like if you have a unique car, say a Saab, and you’re getting good service from the Saab dealership in your town. Then, the Saab dealer goes bankrupt. Sure, you can find another general mechanic who can work on your car, but you’ve lost the specialist who knew your specific needs, had the parts in stock, and could advise you on your specific needs.”

VC-backing might also need a beat or two to recover. The once red-hot VC market was already coming off of a high in 2021, when money was flowing like water into the cloud, cybersecurity, and networking space.

A recent GlobalData report that noted VCs did become more cautious last year. The research firm’s data found that the number of billion-dollar VC deals dropped from 22 in 2021, to just four deals last year. Conversely, the number of deals valued at $10 million or less increased from 64.1% of the total in 2021, to 67% of total VC deals last year.

“There is plenty of capital available for great ideas. Money is just on hold for a minute,” Forrester’s Johnston explained. “Investors are going to take more time to be sure dollars put in at the right inception point when these early-mid stage concepts are ready to hit their targets. These are big bets. There is no fault in trying to make the best one. The market has been way too loose for too long letting valuations outpace real results. This is another step in the reconciliation.”