SVB Financial Group (Silicon Valley Bank)
48 Hours: How Twitter Killed a $200 Billion Bank
Filed: March 10, 2023
Silicon Valley Bank collapsed in 48 hours — the largest U.S. bank failure since 2008 and the first Twitter-driven bank run in history. SVB had loaded up on long-dated Treasury bonds during the zero-interest-rate era. When the Fed hiked rates, those bonds lost billions in value. SVB announced a $2.25 billion capital raise on a Wednesday. By Friday, depositors — a uniquely concentrated group of VCs and tech founders — had pulled $42 billion. The FDIC seized the bank.
The Numbers
Timeline of Collapse
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SVB founded at a poker game by Bill Biggerstaff and Bob Medearis. Becomes the bank of the tech industry.
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Tech boom: SVB deposits triple from $60B to $198B in two years. Invests heavily in long-dated Treasury bonds and mortgage-backed securities.
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Fed begins most aggressive rate hike cycle in 40 years. SVB's bond portfolio loses $15B+ in value. Unrealized losses exceed the bank's entire equity base.
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SVB announces $1.8B realized loss from bond sales. Announces $2.25B capital raise. VCs panic.
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Peter Thiel's Founders Fund, Union Square Ventures, and other VCs tell portfolio companies to pull money from SVB. $42 billion withdrawn in 24 hours.
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FDIC seizes SVB. Largest bank failure since Washington Mutual in 2008. SVB's holding company files Chapter 11 a week later.
Root Cause Analysis
What actually killed SVB Financial Group (Silicon Valley Bank).
- ▸ Asset-liability mismatch: funded long-dated bonds with short-term, flighty deposits
- ▸ Extreme depositor concentration: tech founders and VCs who all know each other, communicate on Twitter, and move as a herd
- ▸ Fed rate hikes exposed the bond losses — SVB was solvent on paper with hold-to-maturity accounting but insolvent in a fire sale
- ▸ Risk management had no Chief Risk Officer for 8 of the 12 months before collapse
- ▸ Twitter-fueled bank run: VCs publicly tweeting 'get your money out' turned a liquidity problem into an existential crisis in hours
Lessons Learned
What investors, executives, and regulators should take away.
- ! Interest rate risk is real — a bank can be solvent on paper and dead in 48 hours
- ! A depositor base of VCs and tech founders is the opposite of 'sticky' — it's napalm
- ! When your regulators and your depositors are on Twitter, bank runs happen at internet speed
- ! A Chief Risk Officer is not optional for a $200 billion institution. Eight months without one is negligence.
Sources
All data sourced from public records. Verified against SEC filings and court documents.