Complete Breakdown of Silicon Valley Bank Collapse

Silicon Valley Bank (SVB), founded in 1983, specialized in lending money to technology and biopharma start-up companies. It funded the start-up companies by borrowing deposits from rich companies. To maintain the interests of these wealthy depositors, SVB generated the funds by choosing to invest their money in a secure long-term Treasury Bond.

Before moving ahead, a basic idea about Treasury Bonds is necessary to understand what happened with the Silicon Valley Bank (SVB).

If you are already accustomed to the term, skip to Why Did the Collapse Happen?

A treasury bond is a debt security issued by the United States Department of the Treasury to finance the government’s operations and activities. Treasury bonds are considered the safest investments available and are highly liquid, making them a desirable option for investors seeking capital preservation and a steady income stream.

Now, answering the question in everybody’s mind.