{"id":162,"date":"2023-03-11T12:02:38","date_gmt":"2023-03-11T18:02:38","guid":{"rendered":"https:\/\/enjoyingthisjourney.com\/svb-collapse-could-have-far-reaching-impacts-for-tech-world\/"},"modified":"2023-03-11T12:02:38","modified_gmt":"2023-03-11T18:02:38","slug":"svb-collapse-could-have-far-reaching-impacts-for-tech-world","status":"publish","type":"post","link":"https:\/\/enjoyingthisjourney.com\/svb-collapse-could-have-far-reaching-impacts-for-tech-world\/","title":{"rendered":"SVB Collapse Could Have Far-Reaching Impacts for Tech World"},"content":{"rendered":"

Silicon Valley Bank, the lender that has been a fixture in the venture capital space for decades, collapsed on Friday, March 10, 2023.[0]<\/a><\/sup> 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]<\/a><\/sup> 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]<\/a><\/sup><\/p>\n

The FDIC announced that insured depositors will have access to their funds on Monday, March 13, 2023.[3]<\/a><\/sup> Uninsured depositors, however, will receive an \u201cadvance dividend\u201d of an unspecified amount within the next week.[4]<\/a><\/sup> In order to make up for the losses, SVB said it planned to raise $2.25 billion to build up its finances.[5]<\/a><\/sup><\/p>\n

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

The bank's downfall followed the Federal Reserve\u2019s 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]<\/a><\/sup><\/p>\n

The FDIC\u2019s 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]<\/a><\/sup><\/p>\n

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.<\/p>\n

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]<\/a><\/sup> Now, depositors wait to see how they will be able to recoup their uninsured deposits.[2]<\/a><\/sup><\/p>\n

0. <\/span>“How does a bank collapse in 48 hours? A timeline of the Silicon Valley Bank fall” KABC-TV, 11 Mar. 2023, https:\/\/abc7.com\/svb-silicon-valley-bank-timeline-explainer\/12942100\/<\/a><\/p>\n

1. <\/span>“Opinion | Silicon Valley Bank\u2019s collapse reflects the tech sector\u2019s deep anxiety” The Washington Post, 11 Mar. 2023, https:\/\/www.washingtonpost.com\/opinions\/2023\/03\/10\/silicon-valley-bank-collapse-tech-sector\/<\/a><\/p>\n

2. <\/span>“Silicon Valley Bank had no official chief risk officer for 8 months while the VC market was spiraling” Fortune, 10 Mar. 2023, https:\/\/fortune.com\/2023\/03\/10\/silicon-valley-bank-chief-risk-officer<\/a><\/p>\n

3. <\/span>“How Silicon Valley Bank's Failure Is Creating Total Chaos” New York Magazine, 10 Mar. 2023, https:\/\/nymag.com\/intelligencer\/2023\/03\/how-silicon-valley-banks-failure-is-creating-total-chaos.html<\/a><\/p>\n

4. <\/span>“Silicon Valley Bank collapse hits companies such as Camp, Compass Coffee” Fox Business, 11 Mar. 2023, https:\/\/www.foxbusiness.com\/markets\/silicon-valley-bank-collapse-hits-companies-camp-compass-coffee<\/a><\/p>\n

5. <\/span>“Why the SVB-Triggered Selloff Is a Buying Opportunity in Big Bank Stocks” Barron's, 10 Mar. 2023, https:\/\/www.barrons.com\/articles\/bank-stock-buy-svb-52ee8b9e<\/a><\/p>\n

6. <\/span>“Most of Silicon Valley Bank's Deposits Were Uninsured” TIME, 10 Mar. 2023, https:\/\/time.com\/6262009\/silicon-valley-bank-deposit-insurance\/<\/a><\/p>\n

7. <\/span>“Companies scramble to meet payroll, pay bills after SVB's swift failure” CNBC, 10 Mar. 2023, https:\/\/www.cnbc.com\/2023\/03\/10\/silicon-valley-bank-customers-scramble-to-meet-payroll-pay-bills.html<\/a><\/p>\n

8. <\/span>“Takeaways from America's second-largest bank failure” CNN, 11 Mar. 2023, https:\/\/www.cnn.com\/2023\/03\/11\/business\/svb-collapse-roundup-takeaways\/index.html<\/a><\/p>\n

9. <\/span>“Silicon Valley Bank failure signals widespread risk amid high interest rates” Markets Insider, 11 Mar. 2023, https:\/\/markets.businessinsider.com\/news\/stocks\/silicon-valley-bank-failure-collapse-interest-rate-hikes-financial-risks-2023-3<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

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 […]<\/p>\n","protected":false},"author":2,"featured_media":161,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3],"tags":[],"_links":{"self":[{"href":"https:\/\/enjoyingthisjourney.com\/wp-json\/wp\/v2\/posts\/162"}],"collection":[{"href":"https:\/\/enjoyingthisjourney.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/enjoyingthisjourney.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/enjoyingthisjourney.com\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/enjoyingthisjourney.com\/wp-json\/wp\/v2\/comments?post=162"}],"version-history":[{"count":1,"href":"https:\/\/enjoyingthisjourney.com\/wp-json\/wp\/v2\/posts\/162\/revisions"}],"predecessor-version":[{"id":163,"href":"https:\/\/enjoyingthisjourney.com\/wp-json\/wp\/v2\/posts\/162\/revisions\/163"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/enjoyingthisjourney.com\/wp-json\/wp\/v2\/media\/161"}],"wp:attachment":[{"href":"https:\/\/enjoyingthisjourney.com\/wp-json\/wp\/v2\/media?parent=162"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/enjoyingthisjourney.com\/wp-json\/wp\/v2\/categories?post=162"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/enjoyingthisjourney.com\/wp-json\/wp\/v2\/tags?post=162"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}