{"id":174,"date":"2023-03-11T16:02:28","date_gmt":"2023-03-11T22:02:28","guid":{"rendered":"https:\/\/enjoyingthisjourney.com\/the-collapse-of-silicon-valley-bank-challenges-for-tech-companies-and-financial-institutions\/"},"modified":"2023-03-11T16:02:29","modified_gmt":"2023-03-11T22:02:29","slug":"the-collapse-of-silicon-valley-bank-challenges-for-tech-companies-and-financial-institutions","status":"publish","type":"post","link":"https:\/\/enjoyingthisjourney.com\/the-collapse-of-silicon-valley-bank-challenges-for-tech-companies-and-financial-institutions\/","title":{"rendered":"The Collapse of Silicon Valley Bank: Challenges for Tech Companies and Financial Institutions"},"content":{"rendered":"

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]<\/a><\/sup> 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]<\/a><\/sup> 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]<\/a><\/sup><\/p>\n

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]<\/a><\/sup> Shares tumbled by 60% in Thursday trading, and another 20% in aftermarket trading.[4]<\/a><\/sup> On Friday, the government stepped in and took control of the lender. <\/p>\n

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 \u201creceivership certificate.\u201d[5]<\/a><\/sup> 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]<\/a><\/sup><\/p>\n

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]<\/a><\/sup> 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]<\/a><\/sup><\/p>\n

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]<\/a><\/sup> 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]<\/a><\/sup> Other financial institutions have been feeling tremors from SVB\u2019s 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]<\/a><\/sup><\/p>\n

0. <\/span>“Where Were the Regulators as SVB Crashed?” The Wall Street Journal, 11 Mar. 2023, https:\/\/www.wsj.com\/articles\/where-were-the-regulators-as-svb-crashed-35827e1a<\/a><\/p>\n

1. <\/span>“How does a bank collapse in 48 hours? A timeline of the SVB fall” CNN, 11 Mar. 2023, https:\/\/www.cnn.com\/2023\/03\/11\/business\/svb-bank-collapse-explainer-timeline\/index.html<\/a><\/p>\n

2. <\/span>“Silicon Valley Bank collapse leaves start-ups scrambling to pay workers” The Washington Post, 11 Mar. 2023, https:\/\/www.washingtonpost.com\/technology\/2023\/03\/11\/silicon-valley-bank-startups-payroll\/<\/a><\/p>\n

3. <\/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

4. <\/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

5. <\/span>“Silicon Valley Bank failure could wipe out ‘a whole generation of startups'” NPR, 11 Mar. 2023, https:\/\/www.npr.org\/2023\/03\/11\/1162805718\/silicon-valley-bank-failure-startups<\/a><\/p>\n

6. <\/span>“SVB\u2019s 44-Hour Collapse Was Rooted in Treasury Bets During Pandemic” Yahoo News, 11 Mar. 2023, https:\/\/news.yahoo.com\/svb-spectacularly-fails-unthinkable-heresy-222710493.html<\/a><\/p>\n

7. <\/span>“Silicon Valley Bank: What you need to know as the crisis sparks stock market chaos” Markets Insider, 10 Mar. 2023, https:\/\/markets.businessinsider.com\/news\/stocks\/svb-silicon-valley-bank-collapse-jpmorgan-morgan-stanley-bank-stocks-2023-3<\/a><\/p>\n

8. <\/span>“Silicon Valley Bank Collapse Leaves Tech Industry Scrambling For Answers” Crunchbase News, 10 Mar. 2023, https:\/\/news.crunchbase.com\/venture\/silicon-valley-bank-impact\/<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

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 […]<\/p>\n","protected":false},"author":2,"featured_media":173,"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\/174"}],"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=174"}],"version-history":[{"count":1,"href":"https:\/\/enjoyingthisjourney.com\/wp-json\/wp\/v2\/posts\/174\/revisions"}],"predecessor-version":[{"id":175,"href":"https:\/\/enjoyingthisjourney.com\/wp-json\/wp\/v2\/posts\/174\/revisions\/175"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/enjoyingthisjourney.com\/wp-json\/wp\/v2\/media\/173"}],"wp:attachment":[{"href":"https:\/\/enjoyingthisjourney.com\/wp-json\/wp\/v2\/media?parent=174"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/enjoyingthisjourney.com\/wp-json\/wp\/v2\/categories?post=174"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/enjoyingthisjourney.com\/wp-json\/wp\/v2\/tags?post=174"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}