Did the Biden administration bail out Silicon Valley Bank to secure more venture capital investment in the military industrial complex?
A recent piece in the March 26th edition of the Wall Street Journal appears to suggest as much.
“The shock waves from Silicon Valley Bank’s rapid collapse this month rippled through the Pentagon, where officials scrambled to come up with plans for startups working on defense projects that had accounts there,” The Journal reported.
According to the piece published March 26th, the Biden administration recently requested $115 million to fund a new Pentagon unit called the Office of Strategic Capital.
The new taxpayer-funded business venture is designed “to attract more investment, particularly venture capital, into companies producing technology and products viewed as critical to the military,” The Journal reported.
Such efforts coincided with “rising interest by venture-capital investors in the military business, spurred by Washington’s focus on China, and the success of such companies as Elon Musk’s SpaceX in winning Pentagon business.”
According the The Journal piece, the collapse of Silicon Valley Bank this month “put at risk some startups already working on Pentagon projects.”
After a push by the Biden Administration, the Federal Reserve eventually guaranteed deposits protecting those and other assets.
“Had the government not stepped in, some military production could have been at risk,” Mike Brown told The Journal.
Brown is a former director of the Pentagon’s Defense Innovation Unit.
Trae Stephens, a partner at the venture-capital Founders Fund, told the Journal “investors are turning to defense because of changing dynamics in the startup market.
“The view of many VCs”, Stephens said, is “You really can’t deploy capital into crypto anymore, you really can’t deploy capital into e-commerce anymore. Where am I going to deploy capital? Well, there is a recession-proof category, it’s defense.”
(Reporting by by Sharon Weinberger, Robert Wall and Doug Cameron in the March 26th issue of the Journal.)