In a stunning banking collapse reminiscent of the Great Recession, Silicon Valley Bank, a financial institution popular among venture capitalists and with ties to high-profile proptech firms like Airbnb, Opendoor, Tomo, Roofstock, and OJO, has been shut down by California regulators. The Federal Deposit Insurance Corporation (FDIC) has seized its assets. The closure occurred as the bank’s depositors started withdrawing their money this week, in some cases at the urging of prominent Silicon Valley figures like Peter Thiel, leading to a run on the bank.
As the financial world reacted to the biggest bank failure since the 2008 financial collapse, the real estate community was bracing for the fallout. The FDIC stepped in to take over the bank within hours.
Silicon Valley Bank had made a significant investment in proptech companies, dubbing the opportunities created by the blending of real estate and technology a “$228 trillion opportunity” in late 2019. The bank invested in Opendoor and Airbnb, among other proptech companies. In 2020, investor Keith Rabois gave credit to the bank for Opendoor’s early success.
The full extent of the collapse’s impact may not be apparent until next week, although some analysts expect it to be significant. In the days leading up to Friday’s closure, the bank had tried to raise funds and find a buyer amidst growing concerns about its financial situation.
