The Collapse of Silicon Valley Bank: Challenges for Tech Companies and Financial Institutions

Silicon Valley Bank, a stalwart of the tech industry for nearly four decades, collapsed on Friday after regulators took control of the California-based financial institution.[0] Founded in 1983, SVB specialized in banking for tech startups and provided financing for almost half of US venture-backed technology and health care companies.[1] The bank grew rapidly during the start-up boom that followed the 2008 financial crisis, but the recent slowdown in venture capital and tech industries caused a sharp drop in deposits, leading to a cash crunch.[2]

In response, SVB announced plans to raise more than $2 billion in capital to offset losses from bond sales, but the move only further spooked investors.[3] Shares tumbled by 60% in Thursday trading, and another 20% in aftermarket trading.[4] On Friday, the government stepped in and took control of the lender.

The Federal Deposit Insurance Corporation (FDIC) said depositors will be able to access up to $250,000 of their funds by Monday morning. Any amount above that will result in a “receivership certificate.”[5] In spite of this, the Federal Deposit Insurance Corporation (FDIC) only guarantees bank deposits up to a maximum of $250,000 – yet the customers of Silicon At the end of last year, a significant portion of SVB's funds were not protected by insurance, with more than 93% of domestic deposits falling into this category, as revealed in a regulatory filing.[6]

Tech companies have experienced a difficult time as of late, with stock prices dropping drastically and countless job losses, now compounded by the failure of Silicon Valley Bank.[5] The rapid expansion seen in the past has now diminished, leading to an instability that does not match up with the current state of the U.S. economy.[2]

The failure of SVB Financial could have far-reaching consequences, as venture-backed companies rely on SVB for loans and holding their operating cash.[7] The bank had more than $200 billion in assets when it failed, and its collapse leaves open gaping questions among startups about cash flow and access.[8] Other financial institutions have been feeling tremors from SVB’s fall, and Signature Bank, prominent in the crypto world, saw its shares drop over 30% while shares of First Republic, a regional bank, fell by 23% by midday Friday.[4]

0. “Where Were the Regulators as SVB Crashed?” The Wall Street Journal, 11 Mar. 2023,

1. “How does a bank collapse in 48 hours? A timeline of the SVB fall” CNN, 11 Mar. 2023,

2. “Silicon Valley Bank collapse leaves start-ups scrambling to pay workers” The Washington Post, 11 Mar. 2023,

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

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

5. “Silicon Valley Bank failure could wipe out ‘a whole generation of startups'” NPR, 11 Mar. 2023,

6. “SVB’s 44-Hour Collapse Was Rooted in Treasury Bets During Pandemic” Yahoo News, 11 Mar. 2023,

7. “Silicon Valley Bank: What you need to know as the crisis sparks stock market chaos” Markets Insider, 10 Mar. 2023,

8. “Silicon Valley Bank Collapse Leaves Tech Industry Scrambling For Answers” Crunchbase News, 10 Mar. 2023,

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