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Silicon valley is a tough place to be a banker. Startup bosses call with references but no revenue. Loans can seldom be secured against physical assets. Many clients fail. Silicon Valley Bank (svb) netted nearly half of America’s venture-backed technology and life-science firms as clients by providing what a venture capitalist calls the “the white-glove, red-carpet treatment”. This was not just about the lunches and events it put on for clients: svb established itself as a reliable cog in Silicon Valley’s dream machine. In the Financial Times, Michael Moritz of Sequoia Capital, a grand venture-capital outfit, lamented the loss as akin to a “death in the family”.

Thanks to regulators, svb’s demise has not meant a Silicon Valley cash crunch. Tech workers need only worry about their jobs as much as they did before. For some, relief at a bullet dodged has turned into anger at the companies quickest to pull deposits, which helped bring down their beloved bank. The next stage of grief ought to be sober risk management. According to the venture capitalist, the chance to replace svb as banker to Silicon Valley is a “tremendous opportunity”. There will be no shortage of institutions with eyes on the $300bn of venture-capital dry powder waiting to be ploughed into startups. But svb’s collapse will scale back Silicon Valley’s ambitions in other ways.

Exactly where the dust and deposits settle remains uncertain. Reports suggest regulators are attempting another auction of svb, having been unable to find a buyer last weekend. Banks and private-equity funds are circling. Nonetheless, startups are finding new homes for their cash. In the chaos of last week, companies with accounts elsewhere transferred their funds. Others tripped on red tape as they frantically opened new ones. Some even wired money to personal accounts. Fintechs had a busy weekend, too. Brex, one such firm, opened 3,000 new accounts. Yet relationships between fintechs and regional banks, which have suffered in the wake of svb’s collapse, may scare off potential long-term clients.

The big banks are likely to be the main custodians of Silicon Valley’s cash in future. Bank of America, Citigroup and JPMorgan Chase can scarcely open accounts quickly enough. Once there, startups can expect a safer, if considerably less intimate, service. Call it the grey-carpet treatment. On March 13th svb’s British operations were acquired for £1 ($1.21) by hsbc, a multinational behemoth. The new business will account for less than 1% of loans, deposits and profits at the firm. Whether the largest institutions reassess the way they bank the smallest tech firms remains to be seen, but such firms will never be their core concern.

Another question is what will happen to the venture-debt market. svb was a major player, with $6.7bn of such loans outstanding when it went under. Startups used this low-cost lending to top up balance-sheets between equity funding rounds. Most now expect such loans to become more expensive, especially for the youngest firms. Venture-capital outfits are unlikely to lower themselves en masse to the comparatively small returns offered by this variety of lending. Other wheels on the venture-capital machine will need oiling, too. For example, svb often provided bridge financing to venture-capital firms, which enabled them to strike deals while awaiting cash from investors.

The loss of svb is likely to have a chilling effect on an industry already suffering from higher interest rates. Limits on financing and difficulties banking small firms will make venture capital’s adjustment to this new world harder than it otherwise would have been. Bankers may have to wait to see venture capital’s dry powder hit their deposit accounts—after all, in the last quarter, the amount of money flowing into startups globally fell by two-thirds. But sooner or later the expectations of investors and startups will realign, and firms will face dreaded “down-rounds” at lower valuations. Trips to the bank might then remind dealmakers of their own mortality. After years of exuberance, that is not necessarily a bad thing. ■

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