Online gaming platform Roblox had about 5% of its $3 billion in cash and securities balance deposited at Silicon Valley Bank (SVB) when it was seized by the federal government last Friday.
What happened? On Wednesday of last week, SVB said it was looking to raise more than $2 billion after suffering major losses on a batch of government bonds it had been forced to sell, due to rising interest rates. Investors got spooked and SVB’s stock lost 60% of its value by Thursday, inspiring a run on the bank with companies looking to transfer their deposits to other institutions. On Friday, the federal government seized SVB, marking the second-largest bank collapse in U.S. history.
Why is this important? SVB was the 16th-largest bank in the United States and had become a go-to option for a wide range of tech companies and startups. According to SVB reports, its clients included 44% of last year’s venture-backed tech and healthcare IPOs and 55% in 2021.