The shutdown of the bank has delivered a significant blow to a Silicon Valley startup industry, a key Bay Area economic engine already struggling through a funding squeeze driven by rising interest…
The collapse of Silicon Valley Bank has stripped the Bay Area’s startup industry — a key driver of the region’s economy — of a crucial source of funding that for decades has fueled innovation and growth.
Before it went under, Silicon Valley Bank said it provided banking services for nearly half America’s venture-backed startups. The institution not only provided key funding to startups, it also lent money to enable growth at more-established tech companies with hundreds of employees, said Sean Randolph, senior director at the Bay Area Council Economic Institute, a think tank.
The shutdown has delivered a significant blow to the Silicon Valley startup industry, a key Bay Area economic engine already struggling through a funding squeeze driven by rising interest rates and inflation, experts said.
Silicon Valley Bank pioneered a unique business model tied closely to the venture capital industry that saw it lending money to startups to supplement their venture capital funding, Randolph said. “That’s not something that big banks have historically done,” Randolph said. “The whole startup area tends to be a riskier field than conventional banking. Silicon Valley Bank, they understood the business.
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