Governance Academy
14 maart 2023

Five reasons why the collapse of Silicon Valley Bank (SVB) still should be on your next board’s agenda

Jesse Grift

[spoiler: one of these reasons is specific to the Dutch startup landscape]

“This is an extinction-level event for startups and will set startups and innovation back by 10 years or more.” (source: Garry Tan, President of Ycombinator (1)). 

According to SVB’s own financial data, it banked 44% of 2022’s venture-backed tech and healthcare IPOs (2) and 55% in 2021. While it is best known as a bank for startups, 56% of its loans (at the end of 2022) were actually to VC and private equity firms, usually secured by their limited partner commitments.

That was the potential impact. 

However, the U.S. government stepped in last Sunday and safeguarded account holders’ deposits at SVB.

SVB’s customers withdrew $42 billion from their accounts last Thursday. That’s $4.2 billion an hour, or more than $1 million per second for ten hours straight (3).

Consequently, SVB defaulted and the FDIC stepped in and closed the bank on Friday, March 9th (4). The next day, on our side of the ocean, the Bank of England stepped in and took control of SVB’s UK Branch (5).

And that was the pace at which events unfolded. 

Within two days, a bank that, only days before, had made Forbes magazine’s annual ranking of the best banks in America.

Although markets appear to be staging a quick recovery after this sudden upheaval, there are certainly lessons to be learned and actions that should be taken:

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