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Silicon valley was unstoppable. Now it’s just a house of cards

By Will Gottsegen

13 Mar 2023 · 4 min read

Editor's Note

Silicon Valley's "lofty visions" were based on an abundance of capital in an era of easy money. But as interest rates rose, a "fundamental precarity" was exposed, writes The Atlantic's Will Gottsegen.

After 48 hours of armchair doomsaying and grand predictions of the chaos to come, Silicon Valley’s nightmare was over. The Treasury Department managed to curtail the worst of the latest tech implosion: If you kept your money with the now-defunct Silicon Valley Bank, you would in fact be getting it back.

When the bank—a major lender to the world of venture capital, and a crucial resource for about half of American VC-backed start-ups—suddenly collapsed after a run on deposits late last week, the losses looked staggering. By Friday, more than $200 billion were in limbo—the second-largest bank failure in U.S. history. Start-ups that had parked their money with SVB were suddenly unable to pay for basic expenses, and on Twitter, some founders described last-ditch efforts to meet payroll for the coming week. “If the government doesn’t step in, I think a whole generation of startups will be wiped off the planet,” Garry Tan, the head of the start-up-incubation powerhouse Y Combinator, told NPR. The spin was ideological as well as economic: At stake, it seemed, was not only the ability of these companies to pay their employees, but the fate of the broader start-up economy—that supposedly vaunted engine of ideas, with all its promises of a better future.

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