Entire Tech Industry At Risk Of Imminent Collapse?

The collapse of Silicon Valley Bank signaled to investors and industry experts that the tech industry might be in trouble, but at this point, it is unclear how the industry will change in the coming months and years.

By Ryan Clancy | Published

tech industry tech companies economic downturn

The years 2022 and 2023 will be forever known as a black period for the tech industry after a mass exodus of employees from every major global technology company; everyone thought the worst was over. Well, think again. Over the weekend came the collapse of the biggest lender to the tech industry, Silicon Valley Bank, thus ensued a mass panic.

Many technology experts described the collapse of the bank as “an extinction-level event for technology start-ups.” Once they heard the devastating news, start-ups from around the world rushed to save their businesses. They tried to line up loans from several areas, such as venture funds and fintech firms. Soe held last-minute sales to boost their revenue and liquidity.

To the relief of many companies in the tech industry, the Federal government stepped in and ensured that every customer of the failed Silicon Valley bank would be granted full access to their deposits this week. This move by the Federal government ensured that many start-ups would not go under overnight by such a prominent leader failing. 

Many CEOs and co-founders confirmed that a high number of small tech businesses and start-ups would have been out of business by the end of the week. This shows how much pressure technology start-up companies are under to try and make a successful product and a profitable company. One mistake, and it is over.

Some companies will have delays in paying their employees due to the Silicon Valley bank imploding overnight. But there is little doubt that their employees will take a late payment over having no job to go to, especially in the tech industry’s volatile job market. 

Many technology companies praised the Federal government for its swift action that helped many companies out of a challenging and stressful situation. While many companies who thought that their business was over are now breathing a sigh of relief, many are still worried about the effects the collapse of Silicon Valley’s biggest lender will have in the long term. 

It is hard to know how this collapse will affect any start-up’s chance of collecting more capital if needed. Some companies are also worried that the perception of Silicon Valley will have changed from their biggest lender collapsing. Is the money gone out of the tech industry? The most profitable businesses in the world are technology-based companies, so why did its biggest lender collapse?

Silicon Valley always had this air of mystery and glamour from an outsider looking in. It is where the best minds get together that change the world as we know it. But has that image shattered along with Silicon Bank?

While Silicon Valley tried its best to save itself by withdrawing any capital from the bank and lobbying for the Federal government to step in and essentially save them, the charity needed to keep this innovation hub alive may not be over. 

The tech industry was one of these industries that people labeled as recession-proof, but now it is on the verge of imploding with thousands of employees asked to leave their jobs, and now Silicon Valley is on the brink of destruction. Will these companies ever return to solid ground?