The new capitalists were supposed to be different. Unlike those corrupt titans of Wall Street or the money-grubbing oil men, the 21st-century tech gurus were meant to be a more ‘enlightened’ class of entrepreneur. They were going to transform our world, with their dazzling technology and their superior social values. Last week’s collapse of the Silicon Valley Bank (SVB) ought to shatter these illusions, once and for all.
SVB’s fall is a major humiliation to the new capitalists. It was critical to the Silicon Valley tech scene. More than half of all the US’s venture-capital-backed startups did their banking there. When it was shut down by regulators on Friday last week, it became the second-largest bank to fall in US history.
In some ways, the story has played out much in the same way as an ‘ordinary’ 21st-century bank failure. Depositors lost confidence in SVB’s stability and tried to pull all their money out at once. And, much like the ‘too big to fail’ banks that triggered the 2008 financial crisis, Silicon Valley’s venture capitalists took their begging bowls straight to the US government, which gladly stepped in to bail them out, guaranteeing every last dollar of their deposits.