Last week was a rough one for venture capitalists, startups, and investment bankers as we saw the thoroughly stunning collapse of what seemed like a permanent institution in Silicon Valley. Silicon Valley Bank, better known as SVB, suffered a bank run due to poor messaging and perceived insolvency on the part of depositors.
In a panic, customers of the bank, who is primarily focused on startups and tech firms, rushed to withdraw their money for fear they would be left holding an empty sack of promises, draining the bank’s reserves completely to the tune of $42B. Hence making the perceived insolvency a reality.
The bank couldn’t meet the remaining requests, so the FDIC took over the bank and declared it insolvent. This only heightened the panic among remaining depositors, who were worried they wouldn’t be able to make payroll and pay operational bills in the coming weeks.
Late Sunday night, the Federal Reserve and FDIC announced they would make depositors whole, with access to their funds on Monday in their full amounts. That’s basically where we are now.
Neither Chris or I are remotely qualified to comment on or analyze what went down, and unlike half of Twitter at the moment, we won’t pretend to be. If you want an excellent breakdown, check out this recent video from Patrick Boyle. And stayed tuned, because this story is still emerging and many of the early details, takes, and “facts” are likely to be wrong.