LATEST March 10, 3:10 p.m. Rippling relied on Silicon Valley Bank to process its customers’ employee paychecks, but when the bank suddenly collapsed, the human resources startup had to quickly pivot.
The firm’s CEO, Parker Conrad, posted an update Friday afternoon, saying that though SVB’s systems indicated that payments were processed, money hadn’t actually gone out to Rippling’s clients’ employees. Rippling quickly began work with its new banking partner, JPMorgan Chase & Co., and got paychecks submitted for overnight processing, meaning that customers’ employees will see their pay arrive Friday, Saturday or Monday, depending on their banks.
— parkerconrad Twitter
Conrad apologized to client employees who did not receive their paychecks on time and wrote that Rippling will reimburse overdraft charges that come as a result of the payment issue.
March 10, 1:30 p.m. Rippling, a fast-growing human resources startup based in San Francisco, is feeling the heat from the sudden collapse of Silicon Valley Bank.
The software company, which raised funding at an $11 billion valuation last year and is a popular HR option for other tech startups, was struggling to get customers’ employees their pay Friday, according to an announcement from the CEO. Rippling relied on Silicon Valley Bank to run payments for its client companies, and after the U.S. seized the assets of the bank Friday, some workers across the country are stuck waiting for their money.
“Pay runs in flight for today out of SVB have not been paid,” Rippling CEO Parker Conrad said in a tweet. “The latest we heard from SVB this morning was that this was an operational delay and funds will be released.”
“However, FDIC involvement makes us skeptical of the assurances we are getting from SVB,” he continued. Conrad wrote that Rippling is going to process payments through JPMorgan Chase & Co. from now on and that the firm’s “top priority” is getting customers’ employees paid as soon as possible.
The collapse of the nation’s 16th-largest bank was swift and dramatic. In recent years, the bank had grown its deposits and reach as the tech industry boomed. But the lender announced a huge loss on an investment sale Wednesday, and depositors — mostly technology workers and venture capital-backed companies — began withdrawing their money as anxiety about the bank’s situation spread.
Bank executives were looking to raise capital early Friday or find additional investors in the company. But shortly before noon ET, the Federal Deposit Insurance Corporation announced that the California Department of Financial Protection and Innovation had shuttered SVB; the federal agency is also now the “receiver” for the failed bank. The asset seizure marks the largest failure of a financial institution since the height of the financial crisis more than a decade ago. Insured balances — typically up to $250,000 per depositor — are guaranteed by the FDIC and will be paid back by Monday morning.
For firms like Rippling that are heavily reliant on SVB’s solvency, the collapse is an immediate headache. A Rippling spokesperson said that the bank closure is delaying previously scheduled pay runs, but new payments initiated through Rippling and its new banking partner will run fine.
In the meantime, Rippling’s customers have to figure out how to move forward on a day when many employees are expecting their biweekly paychecks. Aaron Rubin, the CEO of e-commerce shipping startup ShipHero, said in a tweet that Rippling runs payroll for his 600 employees and called himself a “loyal customer.” His company confirmed it is manually sending paychecks to its lowest-paid warehouse employees — whom Rubin, in an internal message about Rippling pay delays, said were “most vulnerable to negative impacts from their pay arriving late.”
Clara Pratte, the CEO of New Mexico-based Native consulting firm Strongbow Strategies, told SFGATE that her company had moved over to Rippling recently — and plans to switch again.
Pratte said that she has received limited communications from Rippling amid SVB’s collapse and was initially told that pay delays came because “their banking partner had a delay in processing and it was being addressed immediately.”
Her company is now being told that a resolution will come by 6 p.m. PT — which would be too late for some employees to get paid this week. To ensure that employees’ pay is disbursed, Strongbow is transitioning over to manual pay but said her firm received no information from Rippling about getting double-paid funds back.
“Their response and transparency has been appalling,” she told SFGATE in a Twitter DM.
The Associated Press contributed to this report.
Hear of anything happening at a tech company? Contact tech reporter Stephen Council securely at stephen.council@sfgate.com or on Signal at 628-204-5452.
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