Silicon Valley Bank (SVB) filed for bankruptcy, placing nearly $173 billion of funds under the control of the FDIC. SVB boasted that almost half of its bioscience and technology companies are financed by US investors. While filing for bankruptcy allows each customer to recover up to $250,000, the share of uninsured deposits amounts to about 96% of the total entrusted to the bank. The California-based bank’s executives discussed its possible acquisition with several local banks, however, without any success. Start-ups with 10 to 100 employees, who can no longer pay salaries, will have to put people on technical unemployment or lay off. The demise of the bank could destroy a significant driver of the economy in the long-term, as private equity-backed companies depended on SVB for their loans and budgets. Alternative investment companies are offering to replace the bank and disburse funds immediately to SVB client firms. In theory, decentralized finance or DeFi allows access to funds at any time and without an intermediary, but without deposit protection or supervision from a regulator.
Tech Start-Ups Worried After Silicon Valley Bank’s Bankruptcy
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