LONDON – The fallout from the collapse of Silicon Valley Bank (SVB) is starting to spread around the world.

The British unit of the bank – which was headquartered in the United States and focused on start-ups – is set to be declared insolvent, has already ceased trading and is no longer taking new customers.

Start-up founders are panicking about accessing money and paying employees. On Saturday, the leaders of roughly 180 technology companies in Britain sent a letter calling on Chancellor of the Exchequer Jeremy Hunt to intervene. 

“The loss of deposits has the potential to cripple the sector and set the ecosystem back 20 years,” they said in the letter seen by Bloomberg. “Many businesses will be sent into involuntary liquidation overnight.”

The United Kingdom is just the beginning. SVB had branches in Canada, China, Denmark, Germany, India, Israel and Sweden, too.

Founders are warning that the bank’s failure could wipe out start-ups around the world without government intervention. SBV’s joint venture in China, SPD Silicon Valley Bank Co, was seeking to calm local clients overnight by reminding them that operations have been independent and stable.

“This crisis will start on Monday and so we call on you to prevent it now,” British start-up founders and chief executives said in the letter to Mr Hunt. The companies listed in the letter include Uncapped, Apian, Pockit and Pivotal Earth. 

Mr Hunt spoke with the governor of the Bank of England about the situation on Saturday morning, and the economic secretary to the Treasury was due to hold a roundtable with affected companies later in the day, the Treasury said. 

Underscoring the challenge governments face in getting a handle of the full extent of the fallout: Britain’s Treasury has begun canvassing start-ups, asking how much they have on deposit, their approximate cash burn, and their access to banking facilities at SVB and beyond, two sources familiar with the matter said, asking not to be identified because the information is not public. Treasury declined to comment on the survey.  

Uncapped, a financial tech start-up that lends to other start-ups, said it is launching an emergency funding programme to help companies meet payroll and other obligations, as well as longer-term bridge loans to help with working capital. 

British tech start-up association Coadec said on Twitter that “panic” is setting in as it is clear SVB’s collapse “could have a significant impact on the UK’s tech startup ecosystem.”

The group said it has been in engaging with “Treasury and No. 10 about the potential impact” and “work has been going on overnight on policy options”. 

Mr Alexander Fitzgerald, founder of broadband start-up Cuckoo and a former Treasury official, noted that the finances of British start-ups are already stretched due to a slowdown in the venture capital funding market.

“British start-ups need the Treasury to step in fast,” he said. BLOOMBERG