Sili-gone Valley Bank

And so it ended. In the space of 24 hours, Silicon Valley Bank, the go-to bank for many US tech start-ups and VC funds, succumbed to a classic bank run as depositors scrambled to get their money out. The west coast bank had incurred a $1.8 billion loss on a $21 billion bond portfolio. Overnight, its cash reserves fell to $1 billion in the red after $16 billion was successfully withdrawn, prompting the FDIC to shut it down. For the first time since Washington Mutual collapsed in 2008, a US bank fell prey to animal spirits and the fact that the Federal Reserve had risen interest rates by 1,700% in under 12 months. So serious is the situation for tech start-ups that Y Combinator president and CEO Garry Tan called it an “extinction level event”. The fear now is that this could be the tip of the iceberg, with $60 billion of commercial real estate loans soon to require refinancing. For VC funds and the many entrepreneurs who relied on SVB, a speedy resolution will be needed over the coming days.