Dodging a bullet with Silicon Valley Bank collapse

Sometimes the stars align for a company. So it was with tinnitus therapy medtech group Neuromod, which announced completion of a €30 million fundraising last week just as US president Joe Biden was reading the headlines of Irish newspapers.

Coming just a month after its Lenire device was approved by the Food and Drug Administration, the money will allow the Irish start-up to march into the US market where its first target will be the extensive hearing-impaired cohort among America’s military veterans, a group to which US parties and administrations of all political hues are sensitive.

The fundraising was almost three times what had previously been the largest fundraising by the group – originally spun out of NUI Maynooth – and more than the company had raised in total up to that point.

And when you look back through those taking part in previous rounds, it’s clear Neuromod’s good fortune was indeed holding firm.

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Included in an €8 million fundraise back in September 2019 was Silicon Valley Bank (SVB). So was Neuromod a client? And if so, were they burned when the bank collapsed?

“It’s funny, because if SVB invest, you have to bank with them; that’s part of the deal. But they weren’t set up here and we had not been doing anything too material in the US,” says founder and chief executive Dr Ross O’Neill.

“We did have SVB accounts over there. You can imagine when the news broke, our investors called straight away and said how much have you in those accounts. But it turns out we had only about €5,000 in those accounts so it didn’t hit us too bad.”

So it escaped major pain and still has the benefit of the SVB loan. SVB’s UK operations were acquired by HSBC in a fast-track move facilitated by the UK government.

“It didn’t matter much to us,” says O’Neill, “because that deal was in a syndicate with Kreos Capital. Kreos had led it, they were the primary lender on our contract, so we pay Kreos and they pay SVB, so it didn’t really affect us.”

Sometimes your luck is just in.