FALLS CHURCH, Va. \u2014 When Pentagon officials received word that Silicon Valley Bank collapsed on March 10, they moved quickly to understand how the failure might affect defense startup companies and develop plans to bolster them.<\/p>\n\n\n\n
Mike Madsen, acting head of the Defense Innovation Unit \u2014 a Defense Department organization that works closely with non-traditional and often small companies \u2014 said his immediate concern was that the vendors DIU and other Pentagon offices are partnered with would have to stop executing their programs.<\/p>\n\n\n\n
\u201cIt was very concerning,\u201d he said March 23 during the Potomac Officers Club\u2019s Research and Development Summit in Falls Church, Va. \u201cWe were very busy over that weekend, reaching out to our vendors.\u201d<\/p>\n\n\n\n
Based in Santa Clara, Calif., SVB\u2019s clients included almost half of the country\u2019s venture-backed startups, according to the company\u2019s website. Following its collapse, President Biden announced March 12 the U.S. government would intervene to ensure SVB customers have access to their funds. The Federal Reserve said it will create a new program to protect institutions that could be impacted by an unstable market following the bank\u2019s failure.<\/p>\n\n\n\n
DIU was created in 2015 to serve as a bridge from commercial companies to the Pentagon, helping firms \u2014 including startups funded by private capital \u2014 pitch technology for military users. Along with questions about how SVB\u2019s fall might impact the organization\u2019s projects, Madsen said that prior to the government\u2019s decision to secure the bank\u2019s depositors, DIU considered what ripple effects to watch for and sough to determine whether companies could lose intellectual property.<\/p>\n\n\n\n
He and his team worked with companies to understand the exposure risk they were facing \u2014 everything from payroll to supply chain issues \u2014 and determine whether DIU could mitigate some of those concerns.<\/p>\n\n\n\n
\u201cWe started looking at what are the existing authorities we have to maybe accelerate milestones,\u201d Madsen said. \u201cI was starting to think about some of our commercial capital providers that we\u2019ve worked with in the past and looking at ways that we could collaborate with them.\u201d<\/p>\n\n\n\n
Although DIU assistance wasn\u2019t needed in the end, Madsen said the experience allowed the organization to think through how it would respond and what tools it has available should another bank fail in the future.<\/p>\n\n\n\n
\u201cIf it does happen again, we\u2019re ready to respond,\u201d he said.<\/p>\n","protected":false},"excerpt":{"rendered":"
Prior to the government\u2019s decision to intervene, DIU considered whether the agency has any tools to support defense startups exposed by the bank’s failure.<\/p>\n","protected":false},"author":7,"featured_media":113339,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_yoast_wpseo_meta-robots-noindex":"","_yoast_wpseo_meta-robots-nofollow":"","_yoast_wpseo_canonical":"","_acf":"","_yoast_wpseo_primary_category":19,"_jetpack_feature_clip_id":0,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","_smg_distribution_targets":[]},"categories":[160,33,36,19],"tags":[],"coauthors":[3468],"class_list":["post-51225","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-daily-news-roundup","category-home","category-newsletters","category-pentagon"],"acf":{"subheadline":"","legacy_arc_id":"FDW356HXOJGBRKGI7M5XDYOI7Y","arc_canonical_url":"\/industry\/2023\/03\/23\/svb-demise-drew-quick-response-from-pentagons-defense-innovation-unit\/","remove_feature_photo":false,"is_sponsored":false,"subtype":"","redirect_url":"","disable_inline_ads":false,"native_logo_pretext":"Presented By:"},"yoast_head":"\n