It’s difficult to ignore the parallels between Silicon Valley Bank’s collapse and the onset of COVID-19. Both events seem almost like a sign that the world is crumbling, as if what we thought was solid is actually weak and liable to break at any time. It feels like this is just another confirmation that fresh disasters are part of our everyday lives, and there’s no stopping them.
Both the COVID days and the past weekend were marked by a feeling of surrealism, as though reality has been skewed and is bent on mocking us. The seemingly random events and dramas unfolding left many scrambling to understand what was going on and how to best deal with it. While some Silicon Valley startups managed to secure vital funds from regulators in time for Monday, others succumbed to the pressure or simply could not cope. This sense of un-reality leaves many people feeling uneasy as they grapple with an uncertain future.
Many people were fearful of what would happen to Silicon Valley should the banks start to collapse, but the truth is that Silicon Valley survived – and thrived. Now, after years of Wrapports’ failure, SVB’s collapse has finally allowed startups and early-stage companies to breathe a sigh of relief. Without SVB’s money, these businesses can focus on building their product instead of worrying about whether they will have access to a lender in the future.
It’s been a long time coming, but we finally woke up to the interconnectedness of tech and our over-dependency on certain institutions and voices. These events have made us realize that finance is inherently a human story, one that impacts well beyond “tech elite” and Silicon Valley. I hope this realization ignites fearlessness in all of us to push harder against failing systems, because we need to do better.
There is no doubt that the events of the past few weeks have had a widespread impact on Silicon Valley. Founders are more aware than ever on which of their investors truly add value, and VCs, often ever publicly cordial, have drawn lines and picked teams I’m sure we’ll see act together in the future. But what about normal people? They just had their eyes opened on how the often insular world of venture and startups works (messy as it is).
The biggest thing to come out of the news that depositors will be covered by regulators is that the rebuilding process will start quickly. Determining what caused the reckoning in Silicon Valley and how to prevent it from happening again are still unanswered questions, but being able to provide some level of protection for those most affected by the crisis is a good step in the right direction.