Those investments looked relatively safe at the time but became riskier last year as interest rates rose and the bonds lost some of their value. Many start-ups parked their cash at Silicon Valley Bank, and the bank, in turn, took that money and invested it, including in a bunch of long-dated bonds. That year, the stock market boomed, interest rates sat near zero, and money was flooded into the tech sector. It was an old-fashioned bank run, set off back in 2021 by a series of old-fashioned bad decisions. down wasn’t lending to risky start-ups, or gambling on sketchy crypto coins, or some other ill-considered tech scheme. It’s also true that the bank’s failure will have ripple effects throughout the tech sector in the short term, as companies that kept their money there struggle to get their deposits out and make payroll.īut what brought S.V.B. It’s true that S.V.B., as tech insiders called it, was a Silicon Valley institution, and that it counted many of the tech industry’s best-known start-ups and investment firms as its clients. What can the collapse of Silicon Valley Bank teach us about the tech industry?
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