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SVB Financial Group: Silicon Valley Bank Collapses

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Silicon Valley Bank collapses after capital crisis, sparking panic in venture capital industry.

A group of people in suits standing in front of a large office building, discussing the news of a financial collapse.

The banking and venture capital industry was thrown into disarray on Friday morning with the collapse of Silicon Valley Bank (SVB). The Federal Deposit Insurance Corporation (FDIC) took control of the bank's assets on Friday due to a capital crisis that had been building up since Thursday. This failure has sparked fears that other banks could be next, as panic sweeps through the start-up industry.

SVB Financial Group scrambled on Thursday to reassure its venture capital clients that their money was safe after a capital raise led to its downfall. However, due to the magnitude of the crisis, investors at some venture capital firms urged portfolio companies to move their money out of the bank as soon as possible. Silicon Valley Bank collapsed Friday morning after a stunning 48 hours in which a bank run and a capital crisis led to the second-largest FDIC-insured bank failure of 2020.

The stock of SVB’s parent fell another 66% in pre-trading hours on Friday, as investors quickly realized that the company’s efforts to raise capital had failed. This comes as the tech and tech-adjacent world is already reeling from banking-related carnage, and investors fear for the future of SVB. As a result, shares of SVB Financial Group were halted on Friday after tumbling 66% in premarket trading.

VC firms are urging their portfolio companies to move money out of the embattled lender, fueling fears of a run on the bank. With shares in the bank falling more than 60 percent in the past day, it is clear that investors are concerned about the bank’s future. The panic has intensified as the FDIC took control of the bank's assets on Friday morning.

Venture capital firms across Silicon Valley are now assessing the situation and determining the best course of action to advise their portfolio companies. Industry experts are warning investors to be cautious, as the full ramifications of Silicon Valley Bank’s collapse are yet to be determined. As of now, it is unclear what will happen to the bank’s assets and investments.

As the venture capital industry comes to terms with the news of Silicon Valley Bank’s collapse, investors are being urged to take caution. It remains to be seen what the long-term consequences of this failure will be.

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