Tech Startup Banking Giant Falls: First Citizens BancShares in Talks to Acquire Silicon Valley Bank

Despite the bank's attempts to sell itself, regulators closed it down the next day. However, they later announced a plan to ensure depositors at the bank, which eased concerns in the startup community.

The reasons for SVB's collapse were a combination of bad decisions and bad timing. During the recent venture capital boom, the bank had excess cash as private companies raised substantial amounts of fresh capital at sky-high valuations, which were deposited into the bank. However, as the market slowed with rising interest rates, deposits by startups dipped, and the bank's decision to invest in long-term, higher-yield bonds proved disastrous. When customers began withdrawing cash, the bank had to sell its $21 billion bond portfolio at a $1.8 billion loss.

Silicon Valley Bank was established in 1983 with the objective of backing VC-backed companies, and it grew to become the dominant bank for tech startups and venture debt in the US. Additionally, SVB had a sizable private wealth management division that had significant synergies with its commercial banking operations

.With SVB's demise, startups will have to explore other financial solutions to meet their banking requirements.