How the Silicon Valley Bank collapsed
Thursday was the most obvious beginning of the end for the bank that was a huge player in tech startups. Silicon Valley Bank was seized by regulators Friday in the biggest bank failure since the collapse of Washington Mutual in 2008.
“This is an extinctionlevel event for startups,” Garry Tan, the CEO of Y Combinator, a startup incubator that launched Airbnb, DoorDash and Dropbox and has referred hundreds of entrepreneurs to the bank, told the Associated Press.
Just the day before, the bank had announced plans to raise $1.75 billion to make up for titanic losses on its bond holdings.
Investors didn’t wait to see if that plan would work and decided to cash out as quickly as possible. On Nasdaq, the company’s stock opened 40% lower than the start of the week. It would slide even further, to a total plunge of more than 60% at Thursday’s close.
That’s where trading ends, because trading was halted before opening bell Friday morning due to the extreme volatility of the stock.
The bank carried about $209 billion in total assets at the end of last year and proudly boasted on its website that nearly half of U.S. technology and health care companies that went public last year after getting early funding from venture capital firms were among the bank’s customers.
Among more legacy tech companies that lost relative fortunes in the collapse was internet TV provider Roku, which reported in a Friday filing that about 26% of its cash — $487 million — was deposited at the bank.
There are countless reports of businesses across the country learning of what was about to happen as employees texted that their pay slips never went through.
In Wellesley, a business owner spent his day fruitlessly trying to get ahold of the FDIC and fretting over how he’ll make payroll or pay his business’ other bills. And there were others just like him at all 17 branch locations, each left out in the cold as police informed them their bank was closed.