The startup funding environment was already challenged. That was before Silicon Valley’s favorite bank, and a central artery for financing the startup ecosystem, collapsed. Considering so many startups and venture capital firms have financial ties to or banked with Silicon Valley Bank (or still bank with the bridge bank), could its troubles impact the fundraising space?

“I think there's no sugarcoating it,” this “has made the environment worse,” Pete Flint, general partner at seed-stage VC firm NFX, which banks with SVB, told me. He said that from their perspective over the last 10 days or so, it’s felt like the “psychology has snapped back,” but he argues there’s a belief in the VC community that the cause of SVB’s woes—largely rapidly rising interest rates, as well as woeful mismanagement—is “probably going to pop up somewhere else.”

“There'll be some negative news in one part of the economy, or one set of companies, [and] we're just waiting to see what it is,” he suggests. And “of course, that nervousness is creating uncertainty within the funding environment.”

It’s creating worries for some founders, too: NFX surveyed over 800 founders in their network (those who subscribe to NFX’s newsletters and products) last week, days after SVB’s failure, and over half (about 60%) think that SVB’s downfall will make the already difficult fundraising environment even tougher.

But some VCs see it more as a short-lived blip than a meaningful headwind for startups seeking fresh cash in 2023. One venture investor, who requested anonymity to speak about the matter, told me that they view it as an “incremental pumping of the brakes, but I don't view it as a hard reset,” describing something like a “three week disruption.” However, considering questions around what happens to SVB and its parts that are up for sale (specifically the bridge bank and SVB’s private bank), there “will likely be meaningful long term ripple effects—we just don't know exactly what those are,” they said.

Ethan Kurzweil, a partner at Bessemer Venture Partners, told me via email that while there will be a “clear void” if SVB’s startup-focused services like venture debt aren’t intact moving forward, the debacle is less directly impactful than things like high interest rates and a “pseudo-recessionary environment” to sell new products into for the startup funding environment.

Indeed, based on what some VCs are telling me, it’s not all doom and gloom right now: Flint says NFX has been meeting with more “interesting” companies than he’s seen in the last several months, including a lot in the A.I. space, and that they’re in term sheet negotiations with several companies. Meanwhile, the investor who requested anonymity told me that they just sent a term sheet last week, although they said the valuation was priced lower than 2022 levels. They do suspect, however, that there may be more of a move toward funding businesses "with the potential for medium term profitability," and those less reliant on venture debt or credit facilities.

One bright spot? Sarah Hinkfuss, a partner at Bain Capital Ventures focused on the growth stage, told me she’s actually seeing more activity in terms of companies meeting with VCs, and that post-SVB, there’s been more willingness to share data and financial information. Founders want to “get the right partners around the table, and the importance of that has grown in this period that feels so fragile,” she argues. Whether or not that activity turns into signed term sheets is the question.

On deadline, again…The FDIC extended the deadline for interested parties to submit their bids for Silicon Valley Bank Private Bank and Silicon Valley Bridge Bank, N.A., to Wednesday for the private bank and Friday for the bridge bank. The FDIC is allowing separate bids for the banks and will allow “whole-bank bids or bids on the deposits or assets of the institutions” as well as on their asset portfolios. According to reports, First Citizens submitted an offer to buy all of SVB on Sunday.

First Republic’s troubles: Regional bank First Republic, which is also a provider to startups, is having a rough go of it. Last Thursday, the bank received a rescue influx of $30 billion in uninsured deposits from a who’s-who of the big banks, including JPMorgan Chase and Bank of America. But reportedly just a day later, the bank was having discussions about selling a piece of its business to other banks or private equity firms, per the New York Times. First Republic got hit with a credit downgrade on Sunday, its second in a week, and its stock tanked further on Monday. JPMorgan is now reportedly advising the bank on strategic alternatives, which could include a capital raise or a sale.

See you tomorrow,

Anne Sraders
Twitter: @AnneSraders
Email: anne.sraders@fortune.com
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Jackson Fordyce curated the deals section of today’s newsletter.

This story was originally featured on Fortune.com

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