Dealmaking will continue at SXSW 2023 against the background of the banking crisis
AUSTIN, Texas — The annual 10-day South by Southwest (SXSW) event in Austin, Texas, is rife with free drink menus, celebrity sightings, strobe-light parties and live music performances, driving up consumer spending in the city.
This year, the festival and conference started in full force with this positive mood. Then, midway through the event, the Silicon Valley Bank (SIVB) collapsed, and things got weird — and not in the way Austin’s unofficial slogan, “Keep Austin Weird,” would suggest.
Pressures mounted Sunday afternoon following the collapse of Silicon Valley Bank, and companies that were SVB customers reached a critical juncture where they were forced to make potentially adverse business decisions.
Roku (ROKU), for example, had nearly $500 million tied up in SVB. It probably didn’t anticipate its money evaporating when planning its SXSW experience in downtown Austin. The company showcased its latest technology amid uncertainty about its operations.
Ian Beacraft, CEO of Signal and Cipher, warned that time is short and government officials must act quickly.
“Monday is D-Day for many companies,” Beacraft told Yahoo Finance ahead of the actions taken by the FDIC, Treasury Department and Federal Reserve to stabilize the banking system. “Within weeks we will see stores closing. And within months we will see the impact on the rest of the economy.”
A sigh of relief came hours later from Roku and many other companies at SXSW as the FDIC assured SVB customers that they would have access to all of their funds.
But as the aftermath of the Silicon Valley bank crisis continued to linger, dealmaking remained a top priority at SXSW as entrepreneurs scouted for their next capital injection, venture capitalists scouted the next big tech company, and mega-cap tech companies hosted flashy events.
“I think the next few years in venture capital are going to be probably the best years we’ve had in the last decade,” Lux Capital co-founder Josh Wolfe told Yahoo Finance. “Why? They have many companies that know what they’re doing and their reputation is growing and their access and networks are growing at a time when prices are falling. And if prices go down and valuations get lower, your future returns – if you’re right or lucky – can be very high. So very optimistic for the future of Venture.”
SXSW showcases Austin, autonomous vehicles
Despite the turmoil in the financial sector, SXSW continued its post-pandemic comeback to showcase the latest technology – and its host city, Austin.
For Austin Mayor Kirk Watson, who has returned for a second term more than two decades after his first term, fears of bankruptcy mirrored his experience of the dot-com bubble.
“It feels like ‘Back to the Future’ to me,” Watson told Yahoo Finance at SXSW. “I was mayor and somehow navigated the first big tech boom. And then, shortly after I left, the bubble burst. And we just became a big city. We became where people were looking for the information and knowledge economy.”
“Now we’re a big city and we have all this diversity,” he added. Google (GOOG, GOOGL), Dell (DELL), Tesla (TSLA) and AMD (AMD) logos have been featured on some of the city’s largest properties, providing a visible reminder of the tech companies that have settled in the country.
Austin could see another leg of growth coming from a new wave of technological advances. Artificial intelligence, robotics, virtual reality and autonomous vehicles were just a few examples of innovations showcased during SXSW.
With each new advance, Watson said he strives to foster a city that embraces creativity.
“Austin’s unofficial motto is ‘Keep Austin Weird,'” he said. “I’ve always interpreted that as ‘Keep Austin Creative,’ because those first ideas that you hear when you hear them for the first time, a lot of the time people are like, ‘Whoa, that’s kind of weird,’ even though it’s going to be something really big . And this is a city that embraces that.”
Driverless cars and other forms of autonomous mobility have become a type of technology that is at the forefront in Austin and at SXSW.
In 2021, Tesla CEO Elon Musk decided to relocate his company’s headquarters to the city following clashes with California lawmakers and a reprimand of COVID-19 guidelines. The innovative company and its technology have shaped the city.
Watson told Yahoo Finance that he test-drived Waymo autonomous vehicles while serving in the Texas Senate.
Waymo, which started out as Google’s self-driving unit, has since moved away from Austin. In recent weeks, however, three different autonomous vehicle advocates have scheduled visits or meetings with the mayor, all courting the city’s leaders.
“Seriously, this week I had three different entities calling [to talk] to me, including Tesla,” Watson said. “It will happen, and it will happen soon.”
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