The Collapse of Silicon Valley Bank and its Impact on the Tech Industry

On Friday, Silicon Valley Bank (SVB) was shut down by California regulators and taken over by the U.S. Federal Deposit Insurance Corporation (FDIC).[0] SVB, which was founded in 1983, was the 16th-largest bank in the country and prided itself in its close relationship with tech entrepreneurs.[1] It claimed at the end of 2022 that nearly half of all US venture-backed startups used its services.[1]

The trouble began on Wednesday after SVB suddenly announced a plan to raise billions in capital to cover big losses, setting off widespread panic among investors and the tech founders they backed.[2] According to SVB's proxy statement filed in the beginning of this month, their Chief Risk Officer left their position early in 2020 and the bank did not recruit someone to fill that role until January 2021.[2]

The cause of SVB’s collapse was a massively bad bet on interest rates which caused painful paper declines in its investments, forcing the bank to sell securities at an actual loss.[3] This, coupled with widespread panic among depositors, caused a dramatic sell-off in SVB’s stock on Thursday, followed by another 63% drop in premarket trading on Friday. The FDIC has since announced that insured depositors will have access to their funds on Monday, while an “advance dividend” will be provided to uninsured depositors within the next week.[4]

The FDIC’s takeover of SVB has sparked a domino effect in the banking sector, causing a sharp selloff in stocks of regional banks like First Republic Bank and PacWest Bancorp. Crypto-focused lender Silvergate also announced it was winding down operations and would liquidate the bank after being financially pummeled by turmoil in digital assets.[5]

SVB’s failure has far-reaching implications for the tech industry, with venture capitalists, startups and tech workers all relying on the bank for their finances. This has caused a toy company based in New York, Camp, to suffer from the fallout. The venture capital-backed retailer is now slashing prices and using sales to help fund its operations in the wake of the bank’s collapse.[6]

At the same time, investors are concerned that the FDIC may have to collect more bodies by the time the Federal Reserve is done correcting its easy-money mistakes.[7]

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

1. “Most of Silicon Valley Bank's Deposits Were Uninsured” TIME, 10 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. “Opinion | Silicon Valley Bank’s collapse reflects the tech sector’s deep anxiety” The Washington Post, 11 Mar. 2023,

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

5. “Wall Street banks including JPMorgan, Bank of America see $55B value wipeout” Markets Insider, 10 Mar. 2023,

6. “Camp toy store pleads for help after Silicon Valley Bank collapse” CNN, 11 Mar. 2023,

7. “Opinion | And Now for a Little Bank Panic” The Wall Street Journal, 10 Mar. 2023,

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