SVB Collapse Paradox: Successfully Raised Money 8 times in 2023, Had A Record Revenue in 2022

Silicon Valley Bank (SVB) collapsed last week following a 48-hour bank run, despite successfully raising money throughout the beginning of 2023 and achieving record revenue in 2022.

Data from Blockchain Centre reveals that SVB raised $268.5 million through eight successful fundraising rounds in 2023, with its latest round taking place just two days before the bank’s collapse on March 10.

The bank’s revenue has been increasing annually since 2009, with an all-time high of $7.4 billion in 2022. In the last three months of its existence, the bank organized eight funding rounds for a range of tech startups and growth companies. According to the research:

“The last funding round, which occurred on March 8 – just two days before the collapse, brought the bank the highest revenue this year.”

The Fall of Silicon Valley Bank

The bank’s collapse started gradually with its investment in low-interest US government bonds. The Federal Reserve’s interest rate increase to control inflation worsened the bank’s problems by raising borrowing costs for struggling tech startups that relied on SVB deposits to fund their operations.

The possibility of a banking crisis still looms as other banks are starting to show signs of stress. However, experts note that US and European banks now have stronger financial defences compared to the global financial crisis.

The collapse serves as a cautionary tale for the financial industry, highlighting the need for better regulation and the consequences of overreliance on a single industry.