Silicon Valley Bank collapsed into Federal Deposit Insurance Corp. receivership on Friday, after its long-established customer base of tech startups grew worried and yanked deposits.
The California Department of Financial Protection and Innovation in a statement Friday said it has taken possession of Silicon Valley Bank and appointed the FDIC as receiver, citing inadequate liquidity and insolvency.
Receivership typically means a bank’s deposits will be assumed by another, healthy bank or the FDIC will pay depositors up to the $250,000 insured limit.
Problems mounted for the bank in March after Peter Thiel’s Founders Fund and other high-profile venture capital firms advised their portfolio companies to pull money from the bank. That advice came a day after SVB Financial Group, the bank’s parent company, announced it would try to raise more than $2 billion following a significant loss on its portfolio.
SVB was founded in 1983 over a poker game between Bill Biggerstaff and Robert Medearis, according to a statement from the bank’s 20th anniversary. Since its start, the firm has specialized in providing financial services to tech startups.