On March 10, 2023, Silicon Valley Bank — the 16th largest bank in the United States and the primary financial institution for much of the tech startup ecosystem — was seized by regulators after a classic bank run played out at unprecedented speed.
It started when SVB announced it needed to raise capital. The announcement spooked tech investors, who began pulling their money out. Social media accelerated the panic. Within 48 hours, the bank had collapsed. Two other banks — Signature Bank and First Republic — followed in the weeks after.
The Startup Ecosystem in Crisis
Thousands of tech companies banked with SVB. Their payroll accounts were frozen. Employees across the startup world faced uncertainty about whether they'd receive their next paycheck. The federal government ultimately stepped in to backstop deposits beyond the standard FDIC limit.
The Lesson
Bank runs can now happen faster than ever before, accelerated by digital banking and social media. The financial system's vulnerabilities haven't disappeared — they've just moved online.