In this quick TLDR episode on The Startup Smoothie Podcast, Devon breaks down the recent collapse of Silicon Valley Bank over a quick phone call with a friend. SVB has long been known as the go-to bank for startups, with nearly half of all tech startups having accounts there. However, over 93% of SVB's $161 billion in deposits are uninsured, which created a major problem when the bank decided to invest a large portion of its deposits into mortgage-backed securities. The pandemic-driven growth in deposits led to a miscalculation of how much money depositors would need to withdraw, which caused SVB to lose $2 billion when they had to pull from their savings bucket. The situation was made worse by poor communication from the CEO of SVB, which led to a bank run and eventually the FDIC taking over the bank. Devon also discusses what may happen next for SVB, their clients, and the impact on the tech industry as a whole.
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