On Friday, the Fed formally closed Silicon Valley Bank (SVB) and placed it under FDIC administration.
SVB is the 16th-largest American bank but that’s not the reason they’re so crucial.
Almost 50% of venture-backed firms are thought to bank with SVB.
Up until Monday, when they will be able to access up to $250k of their cash, these firms’ funds are currently frozen.
A bank run caused this to occur.
where a large number of depositors wanted to withdraw their money quickly, resulting in the bank’s rapid insolvency and inability to meet demand beginning on Wednesday, 8th Mar, 2023 when SVB informed shareholders that they had sold nearly all of their Available for Sale (AFS) Securities and were currently seeking money, the situation got worse.
This sale cost SVB 1.8 billion after taxes.
Many VCs and startups became alarmed as a result of this.
SVB might have decided to sell these securities due to Fed’s increasing interest rates and their steep losses caused by the downturn of the tech industry since early 2022.
Monday morning depositors will be eligible to access up to 250k
This will make it extremely difficult for startups to manage their cash-outlay requirements
Before the bank closed a lot of startups were able to withdraw their funds however a higher percentage of them couldn’t.
We are unaware of the result mostly likely SVB’s assets would be acquired and a short term ripple effect could be The stock market would likely take a big hit, and the local economy would suffer from a lack of investment
Adithi Pai 
Leave a comment