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Tech March 23, 2023

How Silicon Valley Bank collapse affects tech companies

The tech industry is facing financial turmoil following the sudden collapse of Silicon Valley Bank (SVB), which had long been considered the funding backbone of the tech venture capital community. The collapse has caused global financial panic and exacerbated uncertainty for the startup ecosystem. The Federal Deposit Insurance Corporation (FDIC) has extended the bidding window for SVB as it has received “substantial interest from multiple parties,” and more time is needed for it and the bidders to “explore all options in order to maximize value and achieve an optimal outcome.” The future of tech startups in many parts of the world is now pending, with the failure of SVB potentially resulting in a very big ripple effect in the startup ecosystem in the US and beyond. It is common for Indian startups to choose to be incorporated in the US to access capital from global venture capital firms, and the money raised is often deposited in SVB. Israel’s high technology sector, a pillar in the country’s economic growth, has also been rattled by the collapse of SVB, with an estimated 500 Israeli companies banking with SVB, with holdings in the billions.

Sources: CGTN

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