CEO Liam Sullivan and COO Erin Barton of Alakazam, a cloud-based extended reality platform, had banked with Silicon Valley Bank. Now they’re working to move their business accounts elsewhere. Derek Davis/Staff Photographer

Erin Barton was in California last week when she got a panicked call from Liam Sullivan, CEO of their Portland-based company, Alakazam Inc. She needed to transfer every cent from the company’s account at Silicon Valley Bank and she needed to do it immediately.

Barton, chief operating officer of the technology startup, tried to wire herself the money last Thursday. The transaction was flagged as “pending.” Barton and Sullivan waited.

The next day, the bank collapsed. It was the second-largest bank failure in U.S. history and the largest since 2008. Two days later, Barton’s transfer was denied.

“It was an exceptionally bad week,” Sullivan said in an interview Wednesday.

However, Alakazam appears to be an anomaly in Maine, where experts say there are unlikely to be ripple effects from the SVB collapse.

Silicon Valley Bank, based in Santa Clara, California, was the 16th-largest bank in the U.S. and provided financing for about half of the country’s venture-backed technology and health care companies. They included companies in Maine, whose connection to SVB also extended to one of the bank’s senior leaders, Chief Credit Officer Marc Cadieux – a Colby College alumnus.


So what happened? The bank invested its funds in long-term bonds when rates were hovering near zero. When interest rates rose, bond prices fell and tanked the bank’s investments. Last week, SVB announced that it had lost almost $2 billion. The stock plummeted and customers raced to pull out their money in a bank run.

CEO Liam Sullivan of Alakazam, a cloud-based extended reality platform, had banked with Silicon Valley Bank. The company is working to transfer everything to a different account. Derek Davis/Staff Photographer

To prevent a widespread crisis, the Federal Deposit Insurance Corp. took control of SVB’s assets and the government pledged to cover deposits. On Monday, President Biden said, “Americans can rest assured that our banking system is safe. Your deposits are safe.”

Sullivan and Barton are relieved not to have lost their business assets, but this week they’ve been stuck, unable to transfer money or access their account.

Luckily, they happened to have an investor check on hand. They’ve set up a fast-tracked account with Bangor Savings Bank, deposited the check and will be able to pay their employees.

But it’s been an emotional roller coaster, Sullivan said, and they’re still operating in crisis mode.



With a massive bank shutdown, there’s always the potential for ripple effects. Will there be any in Maine?

According to Jim Roche, president of the Maine Bankers Association, the simple answer is: “No.”

Most Maine banks are insured by the FDIC, which he said will cover most of the state’s banking customers. They’re a more diverse clientele than the technology-heavy customer base at SVB and those at New York-based Signature Bank, which was taken over by the FDIC on Sunday.

Roche said a few bankers have received questions from account holders, but concerns have been relatively short-lived.

“I just don’t see the ripple effects happening here,” he said, adding that any fallout will not be even remotely close to that of the 2008 financial crisis.

Regardless, some Maine banks have taken measures to quell any panic.


Camden National Bank sent out notices to standard account holders and wealth management clients on Monday, assuring them that their money was safe.

“Markets continue to digest the still-evolving details regarding the closing of Silicon Valley Bank and Signature Bank,” Camden National said in a letter. “One thing is clear … market volatility will likely rule the day in the short term as emotions run high.”


While the ripples were contained, Joe Powers, managing director of Maine Venture Fund, said the collapse will change how some startup companies choose to bank. Banking is all about trust, he said, and when an incident like this happens, trust starts to break down.

“It’s logistically challenging to have many banking relationships,” Powers said, “but it’s probably realistic to think some companies will go forward to have a couple of different accounts at a couple of different banks, just to sort of hedge their bets.”

That’s the plan for Alakazam, which launched last year and provides an immersive, extended-reality web platform.


In addition to now banking with Bangor Savings, Sullivan and Barton said they plan to expand their portfolio with another large bank soon.

Daniel Mingle, CEO of South Paris-based Mingle Health, is also a Silicon Valley Bank customer. He too plans to work with a second bank. But he’s not giving up on SVB, either.

Mingle said he will stick with the bank in its new form, whatever that may be.

“I’m inclined to not add to the confusion by bailing,” he said, adding that the “lack of confidence” in the bank and the system is part of how the situation escalated in the first place.

Mingle’s health care analytics company appears to have emerged from the crisis unscathed. Payroll had gone through just hours before SVB failed, and the transaction also lowered the bank’s account balance below the protected FDIC cap.

“We feel like we’ve dodged a bullet,” Mingle said. “Circumstances have worked out fairly well, though the event was rather frightening. It could have been a disaster.”


The Silicon Valley Bank collapse also served as a reminder for many to trust the system.

“Given where we were Saturday night, this is the best-case scenario for what happened,” Powers said. “There are lessons to be learned, but it doesn’t seem like there was any gross negligence on the part of the companies that invested (their money there). By all accounts, Silicon Valley Bank was a great resource when it was operating.”

For Sullivan, the Alakazam CEO, that’s been one of the hardest parts of the whole fiasco. He loved working with SVB – it didn’t feel like just a bank, he said. The bank seemed like part of the 16-person company and helped it secure multiple business opportunities.


Sullivan and Barton recognize that everything could have been much worse for their business. But there are still lingering questions. When will they be able to transfer the rest of their money? Will they be able to complete the next payroll cycle?

And how might this affect the tech sector in the long term? Silicon Valley Bank was the go-to recommendation from venture capitalists and there’s a new distrust in the investment space, Barton said. She doesn’t know what to expect from investors moving forward.


For a startup, Maine is an ideal place to launch, Sullivan and Barton both said. But as the company has grown, it also has outgrown many of the state’s investment opportunities. Alakazam is finding it increasingly difficult to raise the money from within Maine.

The state has been working to broaden its burgeoning tech sector, but it still has a way to go.

The tech industry was responsible for $3.4 billion of Maine’s $62.7 billion gross domestic product in 2020, or 5%, one of the lowest percentages of any state, according to a report last year by TechNet, a national industry group.

The sector employed 36,000 workers in Maine, or 5.4% of the workforce, a share that ranked 41st nationally.

The number of tech jobs in Maine is expected to grow 11% by 2030, according to the report. But hiring must grow at least 17.9% in order to maintain current tech employment levels.

“In just about any part of the country, the tech sector is dwarfed by Silicon Valley,” said Roche, the head of the bankers’ association.


In this case, perhaps that’s a good thing; the modest size helped insulate the industry in Maine from risks other states faced.

Plus, Maine startups tend to be well-diversified in their funding sources, said Katie Shorey, president of Start Up Maine, a small business development organization.

These companies are working with both local and national banks, the Maine Technology Institute, Maine Angels, private investors and out-of-state venture capitalists. Maine startup businesses also tend to be very intentional about their growth, she said.

“These startups are very thoughtful about how fast they grow and the money they’re taking,” she said. “They’re not trying to be a unicorn.”

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