Silicon Valley Bank used financial sweeteners to attract clients, powering growth for decades—leaving the sector vulnerable when the bank collapsed
Catch up on the headlines, understand the news and make better decisions, free in your inbox every day.Startups stopped replenishing their coffers, leading to a sudden reversal in deposit flows, prompting
When an early stage biotech company that had a $5 million loan with the bank hit trouble in the trial phase of the drug it was developing, its investors decided to wind down the company, Mr. Brunelle said. “The VCs asked the bank to be patient,” he said. SVB agreed and later took a loss in the six figures.
Deposits skyrocketed in 2020, leaping 65%, and jumped an additional 85% in 2021. They peaked at $198 billion in early 2022, quadruple what the bank held in its vaults at the end of 2018. Fatefully it invested a large portion of the deposits in U.S. government debt at the peak of the bond market, and didn’t adequately hedge its risk.
would pitch him on opening more accounts, including money-market accounts that offered higher interest rates than the standard savings account he used,to think about diversifying bank accounts. They are pulling all-nighters trying to build their product or service, raise capital, hire new engineers or accomplish dozens of other tasks required to build their nascent business.
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