Silicon Valley Bank, which does business with roughly half of the nation’s tech and biotech companies, failed on Friday. Now, as federal regulators step in to clean up SVB’s mess, biotech startups are left wondering: What happens to their money, and who’s going to finance the industry?
On Friday morning, the Federal Deposit Insurance Corporation took control of SVB and is presiding over a sale of the firm’s assets to cover clients’ deposits. Its parent company, SVB Financial, had lost more than 66% of its market value over two days after dumping billions of dollars of bonds to shore up its balance sheet. SVB has halted trading of its own stock amid reports that it is trying to sell itself to a larger financial institution.
The XBI, a closely watched index of biotech companies, fell about 3.5% on the news of SVB’s failure. The S&P 500 banks index declined more than 4% amid fears of a broader crisis.
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