On March 10, 2023, Silicon Valley Bank (SVB) failed after a bank run, causing the largest bank failure since the 2008 financial crisis and the second-largest in U.S. history. The collapse of SVB has had a significant impact on startups from the US and abroad, with many unable to withdraw money from the bank. Other large technology companies, media companies, and wineries were also impacted.
During the COVID-19 pandemic, the tech sector experienced a period of growth. Capitalizing on an increase in deposits in 2021, SVB purchased long-term Treasury bonds. The current market value of these bonds decreased as the Federal Reserve raised interest rates to curb the 2021–2023 inflation surge. Higher interest rates also raised borrowing costs throughout the economy and some Silicon Valley Bank clients started pulling money out to meet their liquidity needs. To raise cash to pay withdrawals by its depositors, SVB announced on March 8 that it had sold over US$21 billion worth of securities, borrowed US$15 billion, and would hold an emergency sale of some of its treasury stock to raise US$2.25 billion. The announcement, coupled...
Evan Prodromou
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