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Regulators shuttered Silicon Valley Bank (SVB) Friday and seized its deposits in the largest U.S. banking failure since the 2008 financial crisis and the second-largest ever.
Problems mounted for the bank in March after Peter Thiel’s Founders Fund and other high-profile venture capital firms advised their portfolio companies to pull money from SBV. The advice from Peter Thiel and other high-profile VCs came a day after SVB Financial Group, the bank’s parent company, announced it would try to raise more than $2 billion following a significant loss on its portfolio.
The company’s downward spiral began late Wednesday when it surprised investors with news that it needed to raise $2.25 billion to shore up its balance sheet.
SVB’s stunning downfall, which threatens to upend the U.S. venture capital industry, is sparking fears that other small and regional banks could face similar pressure amid soaring interest rates and shrinking deposits.