"Imagine, a day before we come here, we see on the news that our funds have been frozen," entrepreneur Vahag Karayan told AFP on the streets of Austin, the state capital city of Texas.

Since 1987, the sprawling South by Southwest (or SXSW) has been a destination for musicians, entrepreneurs and forward-thinking celebrities and politicians.

SXSW mixes music concerts, art exhibits and movie premieres as well as panels by Fortune 500 CEOs.

It has been a breeding ground for tech startups, with innovators streaming to Austin to pitch their ideas or just gather wisdom from the creative minds, or deep-pocketed Silicon Valley executives, walking along the sunny streets.

One event, a mentor session with SVB executive Rochelle Stewart, disappeared from the program after the bank, the country's 16th biggest, imploded.

"The SVB bank craziness has affected us, our funds were frozen for a few days, and now they're back on," Karayan said.

The upbeat atmosphere at SXSW was true to years past, but the cognitive dissonance from the bank crisis -- which saw two other banks linked to the cryptocurrency markets collapse -- made its way to Texas.

And for good reason: according to the bank's website, 44 percent of tech and biotech startups launched in 2022 were clients.

"There's certainly a lot of uncertainty...among the 40 startups that were invited to the pitch competition, several of them said they were affected by it," said Rudy Dunbar, a sales director at startup Evercase.

"Luckily we weren't so that's a good thing," he said.

The company, which offers food preservation by replicating sub-zero temperatures without the formation of ice crystals, has diversified its funding, said the Jamaican-born Texas resident.

"Like anything, there are ebbs and flows...Throughout history these things happen and it's cyclical. So I have every belief that in another couple of years, we will be experiencing more positive times," he said.

- 'Scary moments' -

"Startups always have some level of risk" but having your funds disappear overnight was another level, said Kyle Skippon, 30, head of engineering at TITAN Haptics, which develops advanced components for phones and consoles.

"Our funds are diversified so we were safe. But we've had a lot of our partner companies and portfolio companies... had some pretty scary moments," he said.

"But I think once the whole Silicon Valley Bank issue gets sorted out, it will be something that people forget in a few years," the investor said.

"I'm more worried about the macroeconomic trends across the world right now."

For some, the very nature of being a startup is facing the headwinds no matter how threatening they may be.

"We'll go ahead, even with uncertainty. We have no choice," Karayan said.

"It's part of the game....a lot of investors lost money, but the good thing is that the startups are still able to go forward," he said.

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