Silicon Valley Bank Collapses: What Happens to Depositors and Startups?

Silicon Valley Bank, the iconic California lender to venture-backed technology and healthcare companies, failed on Friday amid a tumultuous week of turmoil fueled by its announcement that it would try to raise more than $2 billion in capital after taking losses. The collapse of the second-largest bank failure in U.S. history sent shockwaves through the financial system and caused anxiety in the tech industry, raising questions about whether companies would be able to get their money back and pay their employees.[0]

The Federal Deposit Insurance Corporation (FDIC) was appointed receiver, and is currently working to find a buyer for the institution.[1] All insured depositors will have full access to their insured deposits no later than Monday morning.[2] Any uninsured deposits will receive an “advance dividend within the next week.”[3]

The FDIC said that as of December 31, 2022, Silicon Valley Bank had approximately $209.0 billion in total assets and about $174.5 billion in total deposits.[3] The FDIC will ensure deposits up to $250,000; however, the amount may not be sufficient depending on the size of the business.

Silicon Valley Bank's downfall was tied, in part, to the plunge in the value of bonds it acquired during boom times, when it had a lot of customer deposits coming in and needed somewhere to park the cash.[4] The bank also held a large volume of uninsured deposits and had a concentrated customer base of cash-hungry, venture-capital backed companies.[5]

Elon Musk recently indicated that he was open to the idea of buying Silicon Valley Bank, but it remains to be seen if he is serious.[2] However, he is not the only one looking to capitalize on the opportunity, as investors around the world are looking for ways to bet alongside the billionaire.[6]

The collapse of Silicon Valley Bank has undoubtedly been a difficult time for startups, raising questions about the future of the innovation economy and the banking sector in general. While the FDIC will provide insurance for up to $250,000 in deposits, it remains to be seen how much money depositors will get back in the end as the agency liquidates the bank's assets to pay back its customers.

0. “Silicon Valley Bank collapsed. Here's which companies were affected.” The Washington Post, 12 Mar. 2023,

1. “Yellen rules out bailout for Silicon Valley Bank: “We're not going to do that again”” CBS News, 12 Mar. 2023,

2. “Mark Cuban urges Fed to buy Silicon Valley Bank debt ‘immediately,’ says it’s ‘not the wealthy taking the hit’” Fortune, 11 Mar. 2023,

3. “PR-16-2023 3/10/2023” FDIC, 12 Mar. 2023,

4. “US banks sitting on unrealized losses of $620 billion” CNN, 12 Mar. 2023,

5. “‘Big Short' Michael Burry: SVB collapse like dot-com, housing crashes” Markets Insider, 13 Mar. 2023,

6. “Elon Musk just said he's ‘open to the idea' of buying Silicon Valley Bank after its collapse — but is he serious? Here are 3 other ways to bet alongside the billionaire” Yahoo News, 13 Mar. 2023,

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