Silicon Valley Bank (SVB) was abruptly closed last Friday as a result of “inadequate liquidity and insolvency. This was revealed by the local financial regulator California Department of Financial Protection and Innovation.
It has roughly $175.4 billion in total deposits as of December 31, 2022, and nearly $209.0 billion in total assets. The number of deposits over the insurance limitations was unknown at the time of closing, according to the Federal Deposit Insurance Corporation (FDIC).
Until its abrupt collapse, SVB was a 40-year-old banking organization that catered to the tech sector and was the 16th largest US bank. Before shares of the company’s stock were no longer traded, their stock fell by 60% on Thursday and by another 70% on Friday.
Reasons Silicon Valley Shut Down Its Operation
YC’s president, Garry Tan, tweeted that 30% of the companies revealed through SVB are unable to pay their employees within the next 30 days. According to BD Funding Tracker, the Silicon Valley-based accelerator is on the capitalization tables of over 90 African firms.
SVB oversaw a $100 million investment in Chipper Cash in 2021 after the company’s valuation declined by 37.5% from $2 billion to $1.25 billion the previous year. Existing investors Deciens Capital, Ribbit Capital, Bezos Expeditions, One Way Ventures, 500 Startups, Tribe Capital, and Brue2 Ventures joined this round as well.
Since then, the business has performed multiple rounds of layoffs and has also been impacted by FTX’s liquidity issues.
At the time the bank was taken over by the California regulator, Chipper CEO Ham Serunjogi said, “We had a very minimal amount of money (just about $1 million) held in our SVB account. The financial institution made their investment in Chipper in 2021, and they received the money as soon as that round of financing concluded. SVB currently owns [approximately] 2% of Chipper.
Conclusion
According to Chipper, it is one of the depositors will receive money from the FDIC on Monday. The fintech is the only African company that has acknowledged its exposure to SVB at the time of this study. Startups in Nigeria like Risevest and Vesti claim they are not exposed to the California-based bank in the meanwhile.
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