The startups in Shuly Galili’s investment fund are no longer in danger of being cut off from their deposits at Silicon Valley Bank, the institution that collapsed in shocking fashion on March 9, now that the FDIC is delivering on its promise to restore access to account holders’ funds. But as a pioneer who helped forge a path from Israel to Silicon Valley during her tenure as executive director at the California Israel Chamber of Commerce, Galili remains deeply concerned about the ripple effects of losing SVB, both for the broader tech ecosystem and local Israeli-led companies.

According to reports by the United States–Israel Business Alliance, the Bay Area is home to nearly 500 Israeli-led startups, more than two dozen of which have valuations over $1 billion — known in the industry as “unicorns.” Galili notes that this wouldn’t have been possible without SVB’s infrastructure. Thousands of Israeli tech leaders relied on its robust funding ecosystem to power their businesses.

“It’s hard to believe that anyone can fulfill the magic in the same way as SVB,” said Galili, a founding partner at UpWest, which has invested in more than 40 U.S. startups created by Israeli entrepreneurs. “For more than 15 years they’ve worked with Israeli founders, from relationship management to true industry expertise. It’s been a pillar in the startup innovation economy, so losing that will create a massive void in the ecosystem and create a lot of unknowns.”

To cauterize the bleeding over the weekend, more than 600 venture capital firms signed a public statement in support of SVB, promising that in the event that the bank were to be purchased and appropriately capitalized, the investors would encourage their portfolio companies to resume their banking relationships with the institution.

Like thousands of venture capitalists in the Bay Area, DTCP partner Guy Horowitz did not advise his portfolio companies to immediately withdraw their money from SVB when he and his colleagues first heard news of trouble while attending a Morgan Stanley tech conference in San Francisco on March 9.

“Everyone was watching their [laptop] screens turn red as SVB’s stock plummeted,” Horowitz said. By that afternoon, he said, it was clear that tens of millions of dollars were at risk for his portfolio companies.

“I knew that a funding solution would be fleshed out, but for me, this crisis is a reminder that no brand is secure when people cannot safely access their money, and as an Israeli it’s very important for me to state that this rule also applies to the branding of Israel as the startup nation, where the current aggressive judicial reform and threat of dictatorship could topple Israeli democracy and the economy.”

Horowitz adds that he plans to keep his investment in Silicon Valley, where he’s lived for nearly a decade, in part because he continues to be impressed with the U.S. government’s transparency and the Biden administration’s quick reaction during this banking crisis. “If you know there’s proper leadership and things will be governed fairly then the economy works,” said Horowitz. “A functional system comes down to trust.”

It’s hard to believe that anyone can fulfill the magic in the same way as SVB.

As the drama unfolded, many investors and executives reported going days without sleep as they tried to stave off further damage to the industry that they’d nurtured over decades. After a week of recovery and strategizing, tech leaders are emerging from their collective huddle.

“Everyone was impacted, and it was an incredibly stressful time for all involved, but there was a lot of knowledge sharing as we built strategies to support CEOs at our companies,” said Galili.

So will the recent banking crisis ultimately sour Israeli entrepreneurs on Silicon Valley?

According to dozens of local Israelis who we interviewed, the risks are baked into the journey. As Mountain View-based Israeli entrepreneur and tech product leader Nir Paz put it: “The perception of risk is relative for Israelis because we’ve all been in the military, we’ve been shot at… our tolerance and resilience is high and we can deal with this pressure.”

While many of Paz’s startup mentees who bank with SVB told him they remain concerned about whether they will be able to pay their employees at the next pay cycle, he believes that founders are ultimately passionate people and the current crisis won’t deter their long term vision.

“The startup environment has always been high risk, high reward,” Paz said. “That may scare some people off, but that’s OK, we know that not everyone wants the startup life.”