OUR SVB it was literally Bank of Silicon Valley. His clients included half of American technology companies, as well as most venture capitalists.

This was also his competitive advantage. He knew the needs of IT and technology companies. Its executives were from technology and venture capital. She has built long-term trust relationships with top investors, often co-investing in her clients through venture capital loans.

He even tended to claim the exclusivity of startup deposits. “You will have all your money here, we will review your work quarterly, we believe that you have large investors who will support you if something goes wrong, and who we know and they also have clients. And so we can offer you better prices, more flexibility, better support.” So he reached almost $200 billion in deposits from the most dynamic companies in the American economy.

Its advantage, this connection to the Silicon Valley ecosystem, was also its Achilles’ heel. The technology sector has seen a rapid influx of capital in recent years. SVB deposits tripled in 2021. In addition, the bank also made loans to these companies, which had just raised new capital in what was then an optimistic market. And then interest rates changed. Tech companies are struggling to raise new capital while spending the money saved.

Reserves dwindled and the bank had to sell ten-year bonds to make ends meet. The irony is that the bank placed 10-year US Treasuries with a rather conservative, low-risk product. But if he were to liquidate them prematurely and therefore value them at today’s prices, he would be left with a hole of several billion in his balance sheet.

In 2015, due to capital controls, Workable’s money went to SVB. Now they are back in Athens.

On Thursday morning, like thousands of other technology executives, I received messages from investors concerned about deposits. Most had dozens of companies, hundreds of millions of deposits, and everyone knows everyone, and everyone is online. The tight ecosystem that SVB has been building for 40 years has turned against it in a matter of hours. $42 billion was withdrawn in one day, the largest bank withdrawal of all time. The second of the Workable, which originally went to SVB to avoid capital controls in Greece in 2015. This time, the money left to escape the Silicon Valley bank and find safety in the Greek banking system.

PS: SVB shares were out of trading after closing down -60% on Thursday. It has been in receivership since Friday and the US government has guaranteed all deposits. The contagion may have been averted, but the collapse of SVB shows that the tech sector will continue to pay for the financial excesses of the last decade for some time to come.

* Mr. Nikos Moraitakis is the CEO of Workable Inc.