⚠️BREAKING: *U.S. STOCK FUTURES EXTEND SELLOFF AS SILICON VALLEY BANK'S OMINOUS WOBBLE CASTS LONG SHADOW AHEAD OF JOBS REPORT $DIA $SPY $QQQ 🇺🇸🇺🇸
SVB's clients are disproportionately made up of technology startups, who for the last decade have largely been able to raise all the money they need from venture capitalists. However, the torrent of VC cash eased up in 2022, falling by more than one-third from 2021's record level of $329B, according to data from EY. SVB expects it to fall to $120-140B this year.
over the last year, SVB's bond sales have crystallized a loss of around $1.8B. Hence the need for $2.25B in fresh capital. In other words, if SVB's client base is in trouble, then so - to a lesser, but proportionate degree - is the client base of much of the U.S. banking industry. SVB itself downplayed the problems of its clients. It said that early-stage loans, the riskiest part of its portfolio, account for only 3% of assets and that the lower-risk part of its loan book has grown in importance in recent years. But around one-quarter of its total loan book is to startups. Another 14% is loans to"innovation economy influencers" and high-net-worth individuals.
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