Natural disasters bring about a set of customary responses: declaration of a state of emergency, rollout of government support, a crush of media to the affected areas, a sympathetic outpouring of support to relief agencies. Then, within a few days or weeks, the news cycle shifts and public attention dwindles.
Though not a natural disaster, the dramatic collapse of Silicon Valley Bank on March 10 represented an existential crisis for startups, and the playbook resembled that of a natural disaster response. The Treasury Department stepped in. The media swarmed. Across the country, organizations such as UpSurge mobilized, and people responded.
But as attention wanes in other cities, we can depart from the usual playbook. Baltimore can learn from the crisis to expand support for our tech founders and propel our tech community.
On the heels of a second record-setting year, UpSurge Baltimore released a data-rich report on Baltimore’s startup ecosystem and its accelerating progress. The upshot? We’re poised for a breakthrough. By every metric — companies, dollars invested, average deal size, megadeals, diversity — our city is a tech economy on the rise and a real bright spot in Baltimore. But our nascent ecosystem still has shallow roots that need constant tending.
When the bank crisis hit, we spoke with more than 100 local founders, and we learned that less than 10% were direct depositors at Silicon Valley Bank. But far more could be affected by the collapse, either through inevitable aftershocks or by investor decisions to slip into a wait-and-see holding pattern.
Consider what this could mean for one young Baltimore entrepreneur and his company. Chibueze Ihenacho is a biomedical engineer and founder of ARMR Systems. ARMR has pioneered a revolutionary, life-saving tourniquet that U.S. special operations units have tested in the field. It has preliminary greenlights from the Food and Drug Administration, government research and development contracts, and countless testimonials.
ARMR is just launching its go-to-market and manufacturing efforts, on the path to scaling this breakthrough technology in a $20 billion market. At the pivotal stage of moving from science to sales, companies are always on the razor’s edge, and continued funding is key to their futures. If investors respond to the financial turmoil by waiting out the next few quarters, companies such as ARMR could lose essential momentum and staff — or worse. And ARMR, like many of Baltimore’s other potential major companies, may never realize their promise.
And this is important for all of us.
Startups such as ARMR are driving growth in cities across the U.S. As they scale, they deliver high-quality jobs that provide pathways to prosperity, wealth creation and family security. And in Baltimore, we’re doing it differently, with purpose and intention, aiming to avoid the divides that afflict other innovation hubs and restrain underestimated founders. We’re building an “equitech city,” and the current national upheaval may be exactly what we need to propel this deliberate work and support the hundreds of companies, which, like ARMR, could shape our collective future.
Before the Silicon Valley Bank collapse, U.S. startups were already preparing for another challenging year for fundraising. Now, they’re looking at a slowdown that could last several months or more. Even if the tightening is short-lived, investors will invest less at lower valuations. This pullback will not affect all founders equally. Ihenacho, for example, is a game-changing Black founder, part of a group that, in the best of times, has to fight harder for investment and access. When the market tightens and funders retreat, underestimated founders — especially people of color and women — feel it first and worst.
It’s not time to slow our roll. Maintaining Baltimore’s trajectory — and the promise it offers our city — requires continued focus on early-stage companies with the potential to scale, and founders like Ihenacho, who have demonstrated their strengths.
As founders wrestle with critical questions — around extending runway, generating revenue, finding alternative financing, shoring up operations and caring for themselves and their teams — we can all make an impact, as individuals, companies and investors. Nurture growth by taking a call or meeting and following up with action, making introductions to potential customers or pilot partners, angel investing in a promising company, and championing founders with your networks and contacts.
In so many ways, Baltimore tech is breaking the standard playbook as it grows into the country’s first equitech city. In the aftermath of the SVB collapse, we can emerge stronger than ever.
Jamie McDonald is chief executive officer of UpSurge, an ecosystem builder focused on making Baltimore the country’s first equitech city.