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What does the fall of Silicon Valley Bank mean for startups in Africa?


Last week, news emerged that Silicon Valley Bank, a major lender to startups worldwide, had gone out of business. The Federal Deposit Insurance Corporation (FDIC) took over the bank and put it in receivership. This is the most significant failure of a U.S. financial institution since Washington Mutual in 2008.

Over several decades, high-flying startups gave Silicon Valley Bank a lot of money through cash deposits. The bank kept some of these deposits in cash and used the rest to buy U.S. treasury bonds. The returns on these investments were steady and moderate, especially when interest rates were low.

As of its last call report, which was filed on December 31, 2022, the 16th largest bank in the U.S. had a total of $209 billion in assets and $175.5 billion in deposits, of which about $151.6 billion (86.4%) were not insured.




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