After sending shockwaves through the tech and venture capital industries this week, the collapse of Silicon Valley Bank is now being felt throughout Hollywood. The catastrophic financial event has added another problem to a transitional moment for an industry that is already facing high consolidation and looming strikes.
Wrapbook, a startup founded in 2018 that processes payrolls for film and television productions, has been forced to postpone payments to entertainment industry employees due to losing a percentage of its cash holdings in the bank’s collapse. While the firm maintains that over 96% of its assets were held outside of Silicon Valley Bank, the unexpected event has caused an unavoidable temporary delay of its operations.
“Silicon Valley Bank, the 16th largest bank in the USA, collapsed earlier today and its $175B in deposits are now under control of the Federal Deposit Insurance Corporation (FDIC),” Wrapbook CEO Ali Javid wrote in an email to clients on Friday. “Wrapbook uses Silicon Valley Bank to move payroll funds. This extreme external event will cause payroll to be delayed today, March 10, 2023, and impact the processing of uncashed checks. The delays may continue into next week.”
In a separate email obtained by IndieWire, Javid explained that most of the company’s cash is held in other banks and that he does not expect this to impact the company’s operations in the long term.
“Wrapbook uses multiple banks for our operating funds. We have 96% of our funds outside of SVB and have a strong cash position. We will use our cash position to provide liquidity to our clients, ensuring that any payroll funds with SVB are covered,” he wrote. “We have remediation plans underway with another bank to resume processing payroll early next week. We will reimburse cast and crew for overdraft fees incurred due to SVB’s collapse.”
While Wrapbook’s affiliation with Silicon Valley Bank is notable due to the amount of workers around the industry who could be affected, it is not the only Hollywood company to lose money in the collapse. Following the bank’s failure and subsequent seizure by regulators, Roku disclosed that it had over 25% of its cash holdings stored with Silicon Valley Bank.
“The company’s deposits with SVB are largely uninsured. At this time, the company does not know to what extent the company will be able to recover its cash on deposit at SVB,” Roku said in a statement, though the company claims that it has enough liquid assets to continue operating for at least another 12 months.