Hollywood Startup Wrapbook Says Payroll Delayed By Silicon Valley Bank Failure
The entertainment services firm, which works with production companies, stated that it has 96 percent of its funds at banks outside of SVB and has “remediation plans underway with another bank to resume processing payroll early next week.”
BY ERIK HAYDEN, MARCH 11, 2023
Wrapbook, a startup payroll services firm aimed at Hollywood production companies, told its customers on Friday that its processing for March 10 will be delayed. The entertainment industry firm, with offices in Los Angeles, Toronto and New York, cited the failure of Silicon Valley Bank for the impact to its services.
In an update to its clients on March 11 from co-founder and CEO Ali Javid, the firm stated that it has “96% of our funds outside of SVB” and it has a “strong cash position” to use “to provide liquidity to our clients, ensuring that any payroll funds with SVB are covered,” per a copy of an email obtained by The Hollywood Reporter.
The Wrapbook email added: “We have remediation plans underway with another bank to resume processing payroll early next week. We will reimburse cast and crew for overdraft fees incurred due to SVB’s collapse.”
After revealing the loss of $1.8 billion on March 8 from a sale of investments, Silicon Valley Bank saw investors and depositors withdraw $42 billion in deposits, leading to a negative cash balance of $958 million that day and an order taking possession of the property and business of the bank by California’s Department of Financial Protection and Innovation. “The precipitous deposit withdrawal has caused the Bank to be incapable of paying its obligations as they come due, and the bank is now insolvent,” the order read.
Multiple entertainment companies disclosed in securities filings on Friday that they had accounts with SVB. That includes Roku, which had $487 million with the bank, Roblox, which had an estimated $150 million, as well as Vimeo. In its filing, the Anthony Wood-led Roku stated it “does not know to what extent the Company will be able to recover its cash on deposit at SVB,” but added its other holdings were sufficient to continue operations “for the next twelve months and beyond.”
Wrapbook was founded in 2018 with an eye toward competing with entertainment industry payroll giant Cast & Crew. The company’s app allows production staff to on-board, pay and track payments for projects. The firm said on Friday it is taking steps that include “Working to resume payroll processing with SVB” as well as “Moving forward to process payroll with another banking partner in parallel.”
The company, which has 100-plus employees, raised $27 million in Series A funding from investors including Jeffrey Katzenberg’s WndrCo, Michael Ovitz and Andreessen Horowitz in 2021. It followed that with a Series B raise of $100 million in Feb. 2022 led by Tiger Global Management as well as existing investors.
“Silicon Valley Bank crashing has been an intense surprise,” Javid wrote on his Twitter account on Friday. “We are working hard to get payroll out regardless with our other banking partners and I have never been more proud to be at Wrapbook or apart of the entertainment industry.”