Silicon Valley Bank, the largest financial institution in the California tech hub, was closed today by the California Department of Financial Protection and Oversight, sending shockwaves through the tech industry and beyond. On Friday, the FDIC announced that insured depositors would have access to their deposits no later than Monday morning, but the sudden closure of a top Silicon Valley lender has pushed tech investors and startups to scramble to figure out their financial exposure.
Fintech startup Brex received billions of dollars in deposits from Silicon Valley Bank customers on Thursday, CNBC has learned. The failure of Silicon Valley Bank is rattling markets and raising uncomfortable questions: Will it undermine the broader banking system and have a domino effect on tech companies?
The FDIC took control of Silicon Valley Bank on Friday in order to secure depositors, after a run on the bank led California regulators to intervene and order the closure. Silicon Valley Bank had been unable to raise fresh capital and stem deposit outflows that sent the bank into a death spiral.
The closure of Silicon Valley Bank has caused tech investors and startups to worry about the implications for their financial exposure. Many tech companies have been relying on the bank to finance their operations and Brex was able to receive billions of dollars in deposits from Silicon Valley Bank customers on Thursday, which has provided some relief.
Ashley Tyrner, the founder of FarmboxRx, told The Post on Friday that she has been frantically trying to reach her banker at SVB. She cited the bank’s closure as a “major problem” and said that the uncertainty of the situation has caused her to worry about the future of her business.
The Silicon Valley Bank closure has also raised questions about the stability of the banking system and whether it will be able to withstand a similar crisis. The FDIC has been able to contain the fallout of the closure and has reassured depositors that their deposits are safe, but there is still lingering uncertainty about whether this is the beginning of a bigger financial crisis.
The closure of Silicon Valley Bank has cast a pall over the tech industry and the broader banking system. While the FDIC has been able to contain the fallout, tech investors and startups will be watching closely to see how the situation unfolds.
