SVB Financial Group (Silicon Valley Bank)
48 Hours: How Twitter Killed a $200 Billion Bank
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.
Key Figures
Timeline
SVB founded at a poker game by Bill Biggerstaff and Bob Medearis. Becomes the bank of the tech industry.
Tech boom: SVB deposits triple from $60B to $198B in two years. Invests heavily in long-dated Treasury bonds and mortgage-backed securities.
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.
SVB announces $1.8B realized loss from bond sales. Announces $2.25B capital raise. VCs panic.
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 $42 billion withdrawn in 24 hours.
FDIC seizes SVB. Largest bank failure since Washington Mutual in 2008. SVB's holding company files Chapter 11 a week later.
What Caused It
- 1Asset-liability mismatch: funded long-dated bonds with short-term, flighty deposits
- 2Extreme depositor concentration: tech founders and VCs who all know each other, communicate on Twitter, and move as a herd
- 3Fed rate hikes exposed the bond losses — SVB was solvent on paper with hold-to-maturity accounting but insolvent in a fire sale
- 4Risk management had no Chief Risk Officer for 8 of the 12 months before collapse
- 5Twitter-fueled bank run: VCs publicly tweeting 'get your money out' turned a liquidity problem into an existential crisis in hours
Lessons Learned
- 💡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.