Silicon Valley Bank (SVB), a lender and banker to the startup industry, was closed down by California financial regulators after a bank run triggered by its announcement that it was raising over $2 billion in capital through a share sale. SVB's downfall came as a result of a rapid change in liability composition, as interest rates rose and inflows of non-interest-bearing deposits at the bank fell below outflows. Non-interest-bearing deposits fell by $45 billion in 2022, forcing the bank to replace them with higher-cost liabilities, resulting in the bank being left with an empty bag and leaving the entire startup ecosystem frozen.
Silicon Valley Bank (SVB), a lender and banker to the startup industry, was closed down by California financial regulators after a bank run triggered by its announcement that it was raising over $2 billion in capital through a share sale. SVB's downfall came as a result of a rapid change in liability composition, as interest rates rose and inflows of non-interest-bearing deposits at the bank fell below outflows. Non-interest-bearing deposits fell by $45 billion in 2022, forcing the bank to replace them with higher-cost liabilities, resulting in the bank being left with an empty bag and leaving the entire startup ecosystem frozen.