SVB Collapse Could Have Far-Reaching Impacts for Tech World

Silicon Valley Bank, the lender that has been a fixture in the venture capital space for decades, collapsed on Friday, March 10, 2023.[0] The collapse was caused by a bad bet on interest rates and a bank run, which caused a massive drop in their share price.[1] This prompted the California Department of Financial Protection and Innovation to close the bank and name the United States Federal Deposit Insurance Corporation (FDIC) as the receiver.[2]

The FDIC announced that insured depositors will have access to their funds on Monday, March 13, 2023.[3] Uninsured depositors, however, will receive an “advance dividend” of an unspecified amount within the next week.[4] In order to make up for the losses, SVB said it planned to raise $2.25 billion to build up its finances.[5]

SVB was originally founded in 1983 and was designed to serve businesses.[6] It specialized in loans to venture funds and private equity firms and 9% to early and growth-stage companies.[7] By the end of 2022, the bank was doing business with nearly half of all U.S. tech startups backed by venture capitalists.[8]

The bank's downfall followed the Federal Reserve’s decision to raise interest rates aggressively, which caused the value of long-term bonds to decline. This led to billions of dollars in paper losses for the bank, which was unable to pay back customers who withdrew their deposits.[9]

The FDIC’s takeover of SVB has sparked fears of contagion effects across the entire banking sector. Signature Bank, prominent in the crypto world, saw its shares drop over 30% while shares of First Republic, a regional bank, fell by 23%.[2]

The collapse of SVB could have far-reaching impacts in the tech world, as it is the preeminent provider of venture debt in the industry. It is also a major lender to Chinese startups, who often find it difficult to get financing from traditional banks.

Analysts have stated that SVB's failure will not cause a ripple effect similar to the one that occurred during the global financial crisis, even though there may have been an initial wave of alarm on Wall Street.[0] Now, depositors wait to see how they will be able to recoup their uninsured deposits.[2]

0. “How does a bank collapse in 48 hours? A timeline of the Silicon Valley Bank fall” KABC-TV, 11 Mar. 2023,

1. “Opinion | Silicon Valley Bank’s collapse reflects the tech sector’s deep anxiety” The Washington Post, 11 Mar. 2023,

2. “Silicon Valley Bank had no official chief risk officer for 8 months while the VC market was spiraling” Fortune, 10 Mar. 2023,

3. “How Silicon Valley Bank's Failure Is Creating Total Chaos” New York Magazine, 10 Mar. 2023,

4. “Silicon Valley Bank collapse hits companies such as Camp, Compass Coffee” Fox Business, 11 Mar. 2023,

5. “Why the SVB-Triggered Selloff Is a Buying Opportunity in Big Bank Stocks” Barron's, 10 Mar. 2023,

6. “Most of Silicon Valley Bank's Deposits Were Uninsured” TIME, 10 Mar. 2023,

7. “Companies scramble to meet payroll, pay bills after SVB's swift failure” CNBC, 10 Mar. 2023,

8. “Takeaways from America's second-largest bank failure” CNN, 11 Mar. 2023,

9. “Silicon Valley Bank failure signals widespread risk amid high interest rates” Markets Insider, 11 Mar. 2023,

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