The Silicon Valley Bank collapsed on March 10 after it failed to drum up fresh capital.
Its fall became the second biggest bank collapse in U.S. history, with numerous businesses storing their money within the bank.
These include Airbnb, Tesla, and Uber. Yet, it also impacted some of the biggest tech providers in the CX space.
Indeed, Zoom, Twilio, and Snowflake are all customers of Silicon Valley Bank – alongside many other prominent providers that touch the market.
Atlassian, Box, DocuSign, Dropbox, GitHub, Nutanix, Slack, and SurveyMonkey are all other notable examples.
On Friday, the collapse fuelled fears that these brands wouldn’t be able to pay workers.
Thankfully, U.S. regulators stepped in with emergency measures, which included seizing another bank – Signature Bank – only three days later.
In doing so, federal officials announced that customers who deposited money would be made whole.
Moreover, they will have access to their bank account as of Monday, which will allow these businesses to pay their teams as usual.
Funds will come from a special assessment on banks, not taxpayers.
As such, the tech space can breathe a sigh of relief. Yet, it raises important questions regarding the tech industry's short- and long-term stability.
What Happened at Silicon Valley Bank?
During the pandemic, the number of deposits paid into Silicon Valley Bank tripled. The bank turned some of those into loans, but it also invested some into securities – as banks often do. These are generally considered "safe investments."
Yet, at the bank, issues soon began to bubble under the surface as the federal reserve raised its rates. Those "safe investments" soon started to lose their value when this happened.
Meanwhile, customers began taking out their deposits much faster than the bank had anticipated.
As a result, Silicon Valley Bank had to cash in some of those investments, recouping far less than they had initially invested.