Founded in 1983, SVB has always targeted the universe of start-ups in the legendary Silicon Valley. Over 40 years, it has established itself as the biggest banker for digital entrepreneurs – both for those in indebtedness and liquidity. It was not just a mere adventure around a poker table, as the legend goes in those parts, but also the result of the accurate perception of the consolidation of what would become the largest digital ecosystem on the planet. An amazing journey.
I was at Silicon Valley Bank a few times, initially as a prospective customer, later as a participant in some Latin American connections, and eventually as a friend of some executives. Every bankruptcy is regrettable – and with SVB it was no different. Both for the employees, customers, and shareholders. Even more so for its impact in various ways. A pity.
The comparison to the downfall of the iconic Lehman Brothers has not been without reason. Both – SVB and Lehman Brothers – were symbols of important eras in the US financial market (and even in the international market). Both were pioneering players that stood out in the capital market. With one apparent difference, nonetheless: while Lehman Brothers was the catalyst for the largest crisis in the international financial market since 1929, SVB’s collapse has been diligently mitigated (at least, so far) by the monetary authorities.
The determining factor in its tremendous downfall was the reversal of the long cycles of low interest rates by the FED. This was not something unexpected. Yet, the bank was not prepared.
The irony lies in the incomprehensible concentration of the bank's portfolio in the same type of start-ups, and the incredible concentration of liquidity from thousands of start-ups in the bank's deposits. To say the least, these are serious flaws in the management of financial risks on both sides. Without the immediate bailout that was implemented, many entrepreneurial stories in the US and all over the world would have been compromised.
The disappearance of SVB adds to the billion-dollar losses of several celebrated venture capital funds, to the destruction of several start-ups and scale-ups with liquidity problems, and to the successive waves of layoffs in the formerly magic universe of digital garages.
In the long run, only one more of the countless adjustments in the inflated prices by hyperbolic expectations and bold speculations.
Daniel Augusto Motta é Managing Partner e CEO da BMI Blue Management Institute. Doutor em Economia pela USP, Mestre em Economia pela FGV-EAESP e Bacharel em Economia pela USP. É Alumni OPM Harvard Business School. Atua também como Managing Partner da corporate venture capital WhiteFox sediada em San Francisco (EUA), como Senior Tupinambá Maverick na content tech Bossa.etc e com Membro do Conselho de Administração da Afferolab. Também atua como Diretor de Planejamento Estratégico da UNIBES e Membro do Conselho Deliberativo do MASP. Foi Membro-Fundador da Sociedade Brasileira de Finanças. Foi Professor nos MBAs da Fundação Dom Cabral, Insper, FGV, ESPM e PUC-SP. É autor de diversos artigos publicados por Valor Econômico, EXAME, VocêSA e Folha de São Paulo, e também tem três artigos publicados pela Harvard Business Review Brasil. É autor dos livros best-sellers A Liderança Essencial, Anthesis e Data Insights.