Along the 101 South highway that connects the city of San Francisco in the USA with Palo Alto, Menlo Park, Mountain View, Cupertino, Santa Clara and San José, there are largest technology companies in the world. Apple, Google, Facebook, Tesla, Oracle, Intel, Hewlett Packard, Skype, Uber, and Airbnb are scattered across three-story corporate buildings that compete in creativity, surrounded by parks and nestled in neighborhoods of chalets and impeccable sidewalks.
This area is called Silicon Valley and it was also born because it is like this contains NASA that. with its innovations for the space race, it was the mother of the technological revolution together with the universities of Stanford and the more recent Singularity.
Silicon Valley is considered the “second richest country” in the world” with a per capita income in 2022 of US$128,647, behind only Qatar and ahead of Luxembourg.
Venture capital pioneer
In Santa Clara and at the dawn of the tech boom, it occurred to Roger Smith in 1983 to found Silicon Valley Bank (SVB). He was a venture capital pioneer who need companies with no history to develop their projects.
Until his fall ten days ago, he was the entity US number 16, with $175 billion in deposits. And in a world of low rates through the end of 2022 and plenty of silver, the SVB went from $55 billion in deposits to $186 billion at the end of 2022.
As there was too much money to invest in loans, the SVB invested it in long-term mortgage bonds. Its CEO, Gregory Becker, did not take into account the fall in prices in the midst of the interest rate hike decided by the US Fed.
Before long the SVB had to go out and sell those titles and libertarians like Republican Peter Thiel they sounded the alarm by withdrawing their deposits. The same did the fund with birth certificate in Argentina, Kaszek Venture of Hernan Kazah and Nicolás Szekasy, the most relevant in Latin America.
The absence of regulations
The rest is known history and could happen in the absence of regulations for entities of its size.
For Argentines, the failure of this bank is a loss. They began dating in the late 1980s with Andy Tsao, the managing director for business in emerging markets. One of the first was Lisandro Bril when he was manager of the Hicks fund in the region.
And Tsao, who worked in an office overlooking a tulip garden, recognized him. be a generous lender who has helped our unicorns, from Mercado Libre to Globant to name a few and also incubators with NXTP Lab.
“It was the only commercial bank in the world for technology companies. He was betting on risk. If the startup was already invested by a fund, Silicon Valley Bank would He opened the bank account at no cost, did not cash wire transfers, discounted invoices, which is unusual in the US. but this has allowed Argentine companies to have an advance of funds for their projects. And even more, he gave bridging loans for closing transactions which usually take at least a month. It was a bank tailored to tech companies,” Bril described.
In his view, the fall of this bank shows a Bullfighting of the 21st century without queues for depositors but withdrawing their money with wire transfers and involves a global crisis affecting tech companies from Argentina to Israel. It has affected global trust.
Mind you, the Federal Deposit Insurance Corp has protected deposits of up to $250,000. But many tech companies had much more and will now have to wait for the bank to be sold. Of the Argentines, they assure, all are safe. Of course they have lost their friendly bank in Silicon Valley. It’s not little.
Source: Clarin
