Silicon Valley Bank Collapse

The significant failure of Silicon Valley Bank, one of the largest banks in the United States, is examined, highlighting its rapid downfall due to mismanagement of funds amidst rising interest rates. The bank, which experienced a staggering revenue growth of 81% in 2021, invested heavily in long-term, low-interest bonds, which became a liability as rates rose. A critical moment arose when the bank attempted to calm investors by announcing a stock issuance, leading to a massive withdrawal of funds by depositors. This incident raises concerns about potential contagion effects on the tech and startup industry that heavily relies on banks like SVB, particularly regarding cash flow for payroll purposes.