Silicon Valley investors and founders express shock over SVB’s collapse

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9 questions about Silicon Valley Bank’s collapse, answered

If you work in tech, you had probably heard of Silicon Valley Bank before now. If you’re not familiar with this seemingly regional bank, nobody’s blaming you. It had billions of dollars in deposits, but fewer than two dozen branches, and generally catered to a very specific crowd of startups, venture capitalists, and tech firms. Anyway, you’re here now — Silicon Valley Bank isn’t.

Banking regulators shut down Silicon Valley Bank, or SVB, on Friday after the bank suffered a sudden, swift collapse, marking the second-largest bank failure in US history. Just two days prior, SVB signaled that it was facing a cash crunch. It first tried to raise money by selling shares, then it tried to sell itself, but the whole thing spooked investors, and ultimately, it went under.

The incident has sent shock waves across the tech sector. Many companies and people with money in SVB moved to pull it out earlier in the week — actions that, ironically, contributed to the bank’s demise. But, presumably not everyone was able to get their cash out, and the FDIC only insures deposits up to $250,000, so customers who had more than that in SVB are in a pickle.

Beyond tech, this has caused some shakiness across the banking industry amid concerns that other banks could be in trouble or that contagion could set in. (It’s important to note for consumers here that, really, the money you have in the bank right now is almost definitely fine.) SVB’s blowup is a big deal and a symptom of bigger forces in motion in tech, finance, and the economy.

Still confused about what’s going on? Here are the answers to nine questions you might just have.

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