SVB Bank Run (2023)
The SVB Bank Run of March 2023 was the second-largest bank failure in US history, in which Silicon Valley Bank — a lender central to the technology startup ecosystem — collapsed within 48 hours after a deposit flight triggered by concerns about losses in its bond portfolio.
Silicon Valley Bank (SVB) had spent decades building a dominant position as the primary banking partner for technology startups and venture capital firms in the United States. By the end of 2022, it held approximately $209 billion in assets and served nearly half of all US venture-backed technology and life science companies. Its business model was deeply intertwined with the startup ecosystem: it accepted large deposits from VC-funded companies and offered specialized banking products tailored to the needs of pre-revenue technology businesses.
SVB's problems originated in its investment decisions during the ultra-low interest rate environment of 2020 and 2021. Flush with deposits from startup companies that had raised enormous sums of venture capital during the pandemic boom, SVB invested heavily in longer-dated US Treasury bonds and mortgage-backed securities — higher-yielding than short-term instruments but highly sensitive to interest rate changes. When the Federal Reserve raised interest rates at the fastest pace in four decades through 2022 and 2023, the market value of SVB's bond portfolio fell sharply. By early 2023, the bank had approximately $15 to $17 billion in unrealized losses on its held-to-maturity securities.
On March 8, 2023, SVB announced it had sold $21 billion of its securities portfolio at a $1.8 billion loss and needed to raise $2.25 billion in new capital to shore up its balance sheet. The announcement, intended to demonstrate proactive management, instead triggered alarm. In the hyper-connected technology and venture capital community, word spread instantly — largely through Twitter and messaging apps — that SVB was in trouble. Prominent venture capitalists publicly posted their concerns and urged portfolio companies to withdraw deposits.
The resulting bank run was swift and severe. Customers attempted to withdraw approximately $42 billion in a single day on March 9 — roughly a quarter of SVB's deposits. California regulators shut down the bank on March 10, 2023, and appointed the FDIC as receiver. The speed of the collapse — essentially 48 hours from the capital raise announcement to failure — reflected both the concentration of SVB's depositor base in a single interconnected community and the modern reality that social media and electronic banking allow bank runs to propagate at unprecedented speed.
The US government took the unusual step of guaranteeing all deposits at SVB, including uninsured amounts above the standard $250,000 FDIC limit, to prevent contagion across the banking system. Signature Bank, another institution with significant exposure to digital assets, was shut down the same weekend. The crisis prompted renewed attention to interest rate risk management at midsize banks and to the potential systemic risks of concentrated, technologically connected depositor bases.