Silicon Valley Bank’s collapse is likely to be felt across the technology landscape globally over the coming years.
Silicon Valley Bank was the backbone of many startups and venture capital funds around the world. The effects of its collapse, the biggest banking failure since the 2008 financial crisis, is likely to be felt across the technology landscape globally over the coming years.
« With SVB in essence the Godfather of the Silicon Valley banking ecosystem for the past few decades in the tech world, we believe the negative ripple impact of this historical collapse will have a myriad of implications for the tech world going forward, » Dan Ives, analyst at Wedbush Securities, said in a note on Tuesday.
SVB’s collapse began last week when it said it needed to raise $2.25 billion to shore up its balance sheet. Venture capital firms told their portfolio companies to withdraw money from the bank and other clients looked to get their cash before it became unobtainable. This effectively led to a bank run.
The bank had to sell assets, mainly bonds, at a massive loss.
U.S. regulators shut down SVB on Friday and took control of its deposits. Regulators then said Sunday that depositors at SVB would have access to their money, in a move aimed at stopping further contagion.
But the episode has the potential to impact the technology world in several ways, from making it harder for startups to raise funds to forcing firms to change their business model, according to investors and analysts who spoke to CNBC.’Last thing we needed’
SVB was critical to the growth of the technology industry, not just in the U.
