Startups in Crisis: Understanding the Collapse of Silicon Valley Bank 2023

In this video, we dive deep into the recent collapse of Silicon Valley Bank (SVB) and how it has impacted startups. We begin by explaining the functioning of banks and how they use deposits to extend loans and make investments. We then explore how SVB, like other banks, invested in safe instruments like bonds and benefited from the boom in startup funding in recent years.

However, the US Federal Reserve's decision to hike interest rates last year led to a slowdown in startup funding, which in turn reduced the pace of deposits at SVB. The bank's decision to sell $21 billion of securities at a loss of $1.8 billion and plan to sell $2.2 billion worth of shares further exacerbated the situation.

We then discuss the events that led to the collapse of SVB, including Moody's downgrade of the bank's credit rating, Peter Thiel's Founder's Fund asking its portfolio companies to pull out their money, and customers trying to withdraw $42 billion from the bank in a single day.

Finally, we highlight the impact of SVB's collapse on startups, with around 10,000 small businesses failing to make payroll in the next 30 days and around 100,000 jobs expected to be impacted. We also discuss the efforts of VC firms and startups in India to help those affected by the crisis and the role of regulators in creating a new bank to insure the deposits of SVB's customers.

If you're a startup founder, investor, or just interested in the world of finance and technology, this video is a must-watch to understand the implications of SVB's collapse on startups and the broader ecosystem.