Analysis: What does Silicon Valley Bank’s collapse mean for African startups?
Last week, news broke about the collapse of Silicon Valley Bank, a major lender to startups around the world, which was taken into receivership by the Federal Deposit Insurance Corporation (FDIC), in what is the largest financial institution collapse in the United States since Washington Mutual went under in 2008.
Over the course of several decades, Silicon Valley Bank, which had access to substantial amounts of cash deposits from high-flying startups, maintained a portion of its deposits in cash while utilizing the remainder to purchase US treasury bonds. These investments ensured a consistent and moderate return, particularly in situations where interest rates remained low.
As of the last call report of the US's 16th largest bank, filed on December 31, 2022, it held $209 billion in total assets, with $175.5 billion in total deposits, of which an estimated $151.6 billion (86.4%) were uninsured.
