Annie Tsai

It’s not every day that you get to witness the collapse of a bank. The 16th largest bank in the nation, at that. Well over 65,000 businesses of all sizes and shapes across the United States and Europe, the Middle East and Africa were affected, and they were focusing on solving problems for every flavor of person you can imagine.

At the end of 2022, Silicon Valley Bank held $209 billion in assets, accounting for almost half of all venture-backed companies in the United States. SVB was a pillar in the Bay Area and known for being there for entrepreneurs. They bet on your ideas when no one else would. I know — I opened my startup account there when I founded EdioLabs in 2017, seeking to bring the science of early child development to overworked and tired parents so they could feel, for 10 minutes between dinner and bedtime, that they were connecting with their kids in a meaningful way. I went to SVB because they were where everyone went when you were starting a tech-enabled company. Every person I’ve ever worked with there believed in you. I’ve never talked to so many people inside one bank who were willing to help you find the answers to questions, or help connect you with an expert who could advise you through whatever I was happening that day. The team at SVB cared about you being successful because they knew that with some capital, and help here and there, we could help a whole lot of people live better lives.

Truly something to be proud of, until you aren’t.

“Cry me a river,” the random guy on Twitter said from his computer running lightning fast with that Ryzen Threadripper Pro made by AMD, founded by two guys in a garage and a bank that took a bet on their potential.

“Let tech burn,” one woman said online from her mobile device that was designed right here and connects her to her grandkids every day through FaceTime.

The anger we are all reading about and experiencing is real. And it’s big. But the reality is that the COVID-19 pandemic exacerbated the pain so many people were already struggling through over the past 20 years as consumer technology, personal mobile devices and social media infiltrated our lives to great fanfare. We celebrated the conveniences of connectivity and access to more information than we ever thought possible without appropriately putting guardrails up to protect people who didn’t understand that likes, comments and follows would ultimately destroy self-esteem in our loved ones and replace it with dependency and loneliness. I’m angry about this too.

But, it would be a mistake to blame the bank for this.

Our nonprofit, the San Mateo-Foster City Education Foundation, found itself inside the SVB portfolio in 2021 when Boston Private Bank was acquired. Incidentally, we found our way to Boston Private through its acquisition of Borel Bank & Trust in 2001. Nonprofits have habitually banked with local and regional banks, but through ongoing consolidation in basically every industry, here we were holding since-liquidated assets with SVB with thousands of other nonprofits.

These nonprofits are building affordable housing, funding food pantries, tutoring socioeconomically disadvantaged students, ensuring seniors could get to their doctor appointments, and much more. Important work in our community was being funded and supported by SVB.

It’s not only nonprofits worth highlighting here — millions of paychecks were due between March 10 and March 15. My friend’s aunt had a hair salon in Boston and could not make payroll last week. Rippling, a professional employer organization serving thousands of small businesses, had to re-engineer its pipes to run payroll through a different bank after the first run failed when the FDIC shut SVB down that Friday morning.

With 63% of the U.S. population living paycheck to paycheck, the risks of triggering an economic depression overnight were existential. I am relieved and grateful that the Treasury, FDIC and Federal Reserve saw this and were able to design an elegant way to protect depositors while not bailing the bank out or utilizing any taxpayer dollars to do so.

In the wake of SVB’s failure, the opportunity is ripe to look at how we build a better bank for this next generation of small businesses, entrepreneurs and especially nonprofits. There are a lot of learnings to build on, and I for one am looking forward to banking with them.