The Collapse of Silicon Valley Bank
GeekWire
GeekWire
4.4 • 116 Ratings
🗓️ 10 March 2023
⏱️ 24 minutes
🧾️ Download transcript
Summary
What was previously a point of pride on Silicon Valley Bank's website now reads like a warning sign: nearly half of U.S. venture-backed technology and life sciences companies bank with the financial institution. Financial regulators on Friday morning shut down Silicon Valley Bank and put it in the hands of the FDIC, a jaw-dropping move that has created a crisis for startup founders and their financial backers.
Based in Santa Clara, Calif., Silicon Valley Bank has long been a key player in the Seattle region. GeekWire's reporting suggests that the percentage of tech startups in the Seattle area that used Silicon Valley Bank was even higher than the national average, upwards of 80% or more of the venture-backed companies in the area.
GeekWire co-founder John Cook, who started covering startups and venture capital before the dot-com bust, calls this an "absolute meltdown," the likes of which he hasn't seen before on the startup beat. On this special episode of the GeekWire Podcast, we talk about what caused the situation, what it says about the state of the tech economy, and what could be next for those impacted by the shutdown.
Related coverage:
- Tech startup leaders concerned about making payroll following Silicon Valley Bank meltdown
- Regulators close Silicon Valley Bank in stunning downfall for financial mainstay of tech industry
- Seattle VC firms tell startups to assess positions with Silicon Valley Bank amid funding concerns
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Transcript
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| 0:00.0 | Hi everybody and welcome to GeekWire. I'm GeekWire co-founder Todd Bishop and I'm |
| 0:04.8 | GeekWire co-founder John Cook. Well John I was just looking at Silicon Valley |
| 0:09.2 | Bank's website and what would normally be a bragging point looks to me now more like a major |
| 0:16.4 | warning sign the key point that they make right off the bat on their website is |
| 0:20.9 | nearly half of US venture-backed technology and life science |
| 0:25.9 | companies bank with Silicon Valley Bank regulators Friday morning shut down |
| 0:31.3 | Silicon Valley Bank and put it in the hands of the FDIC. |
| 0:35.6 | This has huge implications for the tech industry for the very reason of that stat that I just |
| 0:40.4 | cited. |
| 0:41.4 | John you've been tracking this news doing some reporting on your own. |
| 0:45.3 | Give us a sense for what you're learning. Well, it's meltdown. Really, I mean, it is a |
| 0:50.8 | absolute meltdown and as we're recording this right now it's unclear if it's a |
| 0:57.0 | meltdown that is spreading to other parts of the economy or if this is going to be just |
| 1:02.2 | contained in the startup and venture |
| 1:04.2 | capital community. Right now it is it is meltdown mode in the startup and |
| 1:09.2 | venture capital world for sure. If you were to look back on Monday of this week and talk to |
| 1:15.3 | entrepreneurs or venture capitalists about the biggest risk they were facing |
| 1:19.3 | this week, I don't think one would have said Silicon Valley Bank, which as you said Todd, banks over 50% of the venture-backed startups in the country. |
| 1:28.8 | Frankly, in the Seattle area where we're based, the number is far, far higher. I've been talking to some |
| 1:34.8 | venture capitalists who are saying it's upwards of 80, 85, even 90% of venture-backed |
| 1:40.4 | startups have their money parked in Silicon Valley Bank. This is a crisis |
| 1:46.5 | that no one saw coming, no one, and there's so many risks and challenges in startups to begin with, |
... |
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