Silicon Valley’s Favorite Bank Was Its Single Point of Failure

For 40 years, Silicon Valley Bank enmeshed itself in the venture capital community, often with the comfortable touches of a beloved hometown bank. Sequoia Capital partner Michael Moritz compared the bank to a “cherished local market” where the people behind the counter knew every customer’s name and sold them their cut of meat with a smile. SVB and its employees could be counted on to “tend community gardens, supply food banks, or provide companionship to the elderly,” he wrote March 12 in an op-ed article in the Financial Times. Until the events of the previous week, he said, Sequoia always recommended that new startups open an account with SVB.

In cities such as London, Boston, New York and Palo Alto, California, SVB pulled out the checkbook to sponsor technology conferences, networking dinners and happy hours, where stressed-out founders clinked glasses with peers and investors. One startup executive says he always told job-hunting friends to get lunch with a local SVB rep—they’d know everyone in the industry who was hiring.