The only bank failure larger than this one in American history was Washington Mutual, which had roughly $300 billion in customer deposits before the 2008 financial crisis. By midday, the FDIC had taken control of the bank. SVB’s stock price fell by 60% on Thursday, and trading was halted on Friday morning. But the risk for these startups was too high, and a self-fulfilling bank run ensued.

Many tech leaders urged companies that banked with SVB not to panic or withdraw their money. venture-backed startups used its services. The bank was the 16th-largest in the country, and has long prided itself in its close relationship with tech entrepreneurs, calling itself the “financial partner of the innovation economy.” The bank claimed at the end of 2022 that “nearly half” of all U.S. SVB was founded in 1983 and is headquartered in Santa Clara, which sits right in the middle of Silicon Valley. “It feels like something that never should have happened, because it’s such a trustworthy entity.” The person spoke on the condition of anonymity because they are worried about losing customers over their ties to SVB. “It’s like a Lehman Brothers moment for Silicon Valley,” says one Silicon Valley startup founder whose company has millions of dollars tied up in SVB. Silicon Valley Bank’s downfall is likely to exacerbate those problems-and could threaten the wider economy. The tech sector was already wading through a harsh macroeconomic climate, with layoffs abounding and stock prices sinking precipitously.

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