The failure of SVB will impact the technology for years to come

The collapse of Silicon Valley Bank could have repercussions for the tech landscape for years to come, analysts and investors said.

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Silicon Valley Bank has been the backbone of many startups and venture capital funds around the world. The effects of its collapse, the largest banking collapse since the 2008 financial crisis, are likely to be felt across the global tech landscape for years to come.

“As SVB has essentially been the godfather of Silicon Valley’s banking ecosystem in the tech world for the past several decades, we believe the negative impact of this historic collapse will have a variety of implications for the tech world going forward,” said Dan Ives, Analyst at Wedbush Securities said in a note on Tuesday.

SVB’s collapse began last week when the company said it had to raise $2.25 billion to shore up its balance sheet. Venture capital firms asked their portfolio companies to withdraw money from the bank, and other clients tried to get their money before it was no longer available. This effectively led to a bank run.

The bank had to sell assets, mostly bonds, at massive losses.

US regulators shut down the SVB on Friday and took control of its deposits. Regulators then said on Sunday depositors at the SVB would have access to their money in a bid to stop further contagion.

However, according to investors and analysts speaking to CNBC, the episode has the potential to impact the tech world in a variety of ways, from making it harder for startups to raise capital to forcing companies to change their business model.

“The last thing we needed”


The collapse of SVB is also likely to shift focus to startups to focus on profitability and be more disciplined with their spending.

“Companies need to reboot the way they think about their business,” Taboola CEO Adam Singolda told CNBC’s Last Call on Monday.

Why haven't we heard from the venture capitalists who were so close to this bank? asks Herb Greenberg

Hussein Kanji, co-founder of London-based Hoxton Ventures, said there will be more corporate restructuring over the next three years, although some are cautious.

“I see a lot of ‘kick the can down the road’ behavior that’s not that helpful. Do the difficult things and don’t hesitate or hesitate unless there is a very good reason to do so. Things often don’t get any easier in the future simply because you wish,” Kanji told CNBC via email.

Wedbush’s Ives said there could be more collapses as well, adding that early-stage tech startups with weaker hands could be forced to sell or shut down.

“The impact of the past week will have a major impact on the tech landscape and Silicon Valley, in our view, for years to come,” Ives said in a note Sunday.

— CNBC’s Rohan Goswami and Ari Levy contributed to this report. The failure of SVB will impact the technology for years to come

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