Major global tech lender Silicon Valley Bank (SVB) collapsed on March 10. This is the largest US banking failure since the 2008-09 global financial crisis, the second-largest ever and probably the most rapid collapse as it took only a few days.
The contagion has already spread far and wide: major lenders to the cryptocurrency industry, Silvergate Capital and Signature Bank, are the most high-profile tech-focused institutions to go under in the United States, but promising tech firms in a wide range of countries — China, United Kingdom, Denmark, Germany, India, Israel and Sweden – are also heavily exposed to SVB. Since the foreign tech sector is not as robust as its US counterpart, many of these firms now face an existential crisis; many will cease to exist without a government bailout.
The collapse of SVB is the most prominent corporate casualty of the US Federal Reserve’ policy of raising interest rates to reduce inflation. The era of cheap money, on which a whole generation of tech firms have depended and bet on, has now come to a close. Yet this is not the only strain facing established and emerging tech firms: antitrust regulations, data security and privacy laws and cybersecurity obligations of digital services providers are tightening globally, and post-pandemic consumer demand is softer than ‘big tech’ anticipated.
As capital and revenue sources become harder to secure, and operating environments become tougher, the next phase of growth for the technology sector will likely be slower and but probably more sober.
Download the webinar recording to watch Oxford Analytica’s special webinar, where we dive into the outlook for the global technology sector, examining three core questions:
- Could the collapse of SVB trigger the next global financial crisis?
- How will the SVB affair affect the technology sector of developed and major emerging markets such as India?
- Will the SVB collapse end the stasis on tech laws and policymaking in the United States, which is increasingly an outlier on regulating ‘big tech’?
- Caitlin Reilly, Banking and financial services reporter, CQ Roll Call (part of the FiscalNote Group)
- Paul Maidment, Editor, Oxford Analytica Investor Brief
- Chair: Megha Kumar, Deputy Director of Analysis (Cybersecurity and Technology), Oxford Analytica