The sudden collapse of Silicon Valley Bank sent shockwaves through the startup community, which has come to view the lender as a source of reliable capital.
SVB Financial Group was shuttered by California banking regulators Friday in a bid to protect depositors following a dive in the value of its investment holdings and a rush of withdrawal requests starting just two days ago.
The bank was seeking a sale, sources told Reuters, and trading in its shares was halted after they plummeted 60%.
At some California branch locations, depositors gathered early Friday to attempt to get their cash out, fearing it could be inaccessible in the coming days.
And at some sites the doors were locked and cursory notes were found advising customers to try elsewhere.
At a Menlo Park, California, branch, customers were greeted by a taped up press release apprising them the bank had moved into receivership and would be known as Deposit Insurance National Bank of Santa Clara.
The bank has been central to the formation of many early stage companies due to its reputation for taking bets on startups that may have had little chance of survival otherwise and for which larger banks may find far too risky.
It has had financial relationships with a who’s who of Silicon Valley firms over the years, including Snapchat’s parent Snap Inc.
Snap declined to comment.
The full extent of the fallout from the bank’s crash could take weeks or months to gauge and might presage a period of more cautious investing in technology startups.
