Name and IDs: M.

Rashid Nawaz F2019314012

Mehran Ali F2019314006

Shahzaib Akram F2019314057

Sobia Abbas S2019358005

Submitted to: Dr. Muhammad Ather Ashraf

Submitted by: M. Rashid Nawaz

University of Management & Technology

Project 1 FN-484 Entrepreneurial Finance

What differentiates SVB from other banks?

SVB was not a typical bank and differed from its competitors in two important respects. The business
model is geared towards the venture capital ecosystem, with a particular concentration of clients in the
technology start-up sector. In recent years, both assets and bank deposits have grown by more than
200%, as a result of an increase in speculative investments in smaller technology companies.

The second big difference is the way SVB manages its balance sheet. Rather than combining deposits
with loans, the SVB invested primarily in long-term fixed-rate government bonds. As interest rates rose
last year, the value of these assets fell, but at the same time, inflows (and therefore deposit growth) for
tech startups slowed. This momentum hurt profitability and weakened the balance sheet.

SVB wanted to better understand our technology and products and be partners in our entrepreneurial
journey. No other bank would understand our business. Account opening had all sorts of strict financial
requirements and the rules never changed.

What was the main line of business for SVB and which industry?

SVB helps individuals, investors and the world’s most innovative companies achieve their ambitious
goals.

SVB was founded in 1983. Headquartered in Santa Clara, the company provides banking services to
approximately 50% of all technology and life sciences venture capital companies in the United States. It
also had a subsidiary in London serving technology companies in the UK and continental Europe.

At the end of 2022, it was the 16th largest bank in the United States by size. Still, it is relatively small
compared to its four US banking giants: JPMorgan Chase, Bank of America, Citibank and Wells Fargo,
with less than 1% of its banking assets in the US. bottom. The growth of SVB deposits since 2020 is
impressive. The tech boom of 2020 to 2021 saw many of the company's tech clients raise large sums of
money from venture capitalists and its private equity investors and deposit the money into its SVB.
means as a result, deposits increased from US$65 billion in 2019 to US$189 billion in 2021.

SVB was also ahead of its time as a pioneer in branchless remote banking. They have developed many
useful mobile banking and business-to-business internet banking features for him.
Give different reasons based on your reading and analysis that SVB went under in 48 hrs. Also discuss the
main reason in detail.

The massive influx of startup deposits during the recent tech bubble presented SVB, like other banks,
with investment challenges. Mismanagement of SVB's investments led to a run on the banks, which
eventually led to its closure and a Chapter 11 filing. Its demise will hurt the tech ecosystem as it no
longer has a focused banking partner that understands the unique needs of the startups. startups are
already seeing results.

This simple truth, which should be obvious, became evident last week when one of America's largest
financial institutions suddenly filed for bankruptcy. Silicon Valley Bank was worth about $17 billion as of
March 1 and had about $200 billion in customer deposits. Their clients were often their venture capital
firms and the companies they financed, making banks strong players in lucrative niche markets. Then,
with little foreshadowing or warning, these ventures panicked when the banks announced that they
would sell some of their government bonds at a loss, advising the companies they supported to
withdraw their money. With $40 billion withdrawn in two days, stocks plummeted and federal and state
regulators stepped in and took over. Two days later, regulators seized New York-based Signature Bank
with more than $100 billion in deposits.

The boom in SVB’s deposits was mirrored in its share price, which rose from $150 in March 2020 to $730
in January 2022 (see Figure 5). This share price rise during 2020-21 matched the boom in share prices
that took place in the US tech bubble

SVB share price from 2018-2023:

What you think is going to be the impact on the Venture Capital industry after this debacle?

Things are getting worse for the small but very important world of startups and venture capital. After a
year of turmoil that included a stock price slump, a dip in mergers and acquisitions and its IPO market,
and massive job cuts, the tech industry is now grappling with the wrath of losing a key institution that
could unleash a national financial panic.

 First, it means startups will lose key partners and funding sources, making the funding
environment more challenging.
 Loans allowed companies to avoid selling more expensive stock, while also providing a cheaper
source of capital to grow their businesses and keep them going until they built up inventories.
Without the SVB, it would be much more difficult for a startup to get a loan.
 Another consequence of growing liquidity problems is increasing pressure on valuations. The
plummeting valuations of tech companies in public markets are already hurting private markets.
Many companies are experiencing down rounds for the first time in years.

Also give at least 5 companies from USA and 5 from Europe which are being impacted from SVP fallout?

USA Europe
Rocket Lab Trust Pilot Group.
Roblox Glantus Holding
Juniper Network Inc. Zeeland Pharma
Acuity Ads Holdings Inc. Technoprobe Spa
Sunlight Financials Holdings Alecta: The Swedish Pension Fund