Silicon Valley Bank: A Timeline of the rise and 48 hour fall

In March of 2023, Silicon Valley Bank (SVB)'s, collapse became the 2nd largest retail bank failure in U.S. history. It went from over $200bil in assets, to being shut down by Federal Regulators in a chaotic 48 hours. Here's the story of the rise and fall of SVB 👇

1983: Silicon Valley Bank was founded in Santa Clara, California. The company's first office was in San Jose, CA. As the technology sector was growing, SVB became the go-to bank for tech startups.

2005: Over the course of 22 years, SVB grew to having offices across the United States along with international subsidiaries in Bangalore, India, London, Beijing and Israel.

2014: SVB was generating $130,000 of net income per employee (compared to Citibank's about $30,000 per employee net income). Over 65% of SVB's banking and financial offerings served startups. Nearly 50% of all US VC-backed startups and healthcare companies were served by SVB.

2020: In response to the COVID-19 pandemic the US Federal Reserve held low interest rates to boost economic growth. Tech companies benefitted from this and valuations soared to potentially overstated levels. SVB's heavy reliance on startups proved to be a major risk.

2022: Fears of a recession, along with rising interest rates raised borrowing costs and caused venture capital to slow. This had been a major source of SVB revenue, so declining revenue along with numerous struggling clients pulling deposits coalesced into a perfect storm.

Feb 27, 2023: SVB CEO Greg Becker sold $3.6mil of his company's stock. In the 2 years prior, Becker sold over $29mil of SVB stock. Days after the most recent sale, the bank disclosed a large loss which quickly caused SVB stock to plummet.

March 8, 2023: SVB Financial Group announced the sale of $21bil of securities at a $1.8bil loss and that $2.25bil in new shares would be available to help repair company finances. This announcement proved to be the nail in the coffin for SVB.

March 9, 2023: Venture capitalists responded to the announcement by withdrawing their money. SVB stock collapsed by 60%. The next day, US authorities halted trading of SVB shares altogether. They seized assets and the FDIC took responsibility to pay depositors.

Bottom line: A critical combination of heavy investment in a risky sector combined with poorly timed stock sales and announcement panicked investors, causing a bank run that killed Silicon Valley Bank.

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