With the bankruptcy of Silicon Valley Bank, a lot of uncertainty has arisen regarding startup financing. Its impact lies in the fact that it marks the end of venture capital, a model developed over the last decade, focused on financing those who are starting their entrepreneurship journey.
Another critical issue is the discrimination faced by many women, people of color, and members of the LGBTQ+ community when accessing funding. In 2021, only 16% of the loans granted were to black individuals, while 35% went to white individuals.
It’s estimated the bank’s losses amount to USD $1.8 billion and experts predict this will result in a recession this year. Additionally, Silicon Valley is home to some of the most important technology companies, which could mean losing American leadership in the sector.
Now, a critical task falls on the Federal Reserve, which has the responsibility to fight against inflation and mitigate the financial risks that may arise from this issue, such as interest rate hikes. And many believe that when the United States sneezes, the rest of the world catches a cold…
The bankruptcy of this giant represents a setback for new businesses, the technology sector, and equality in credit access for vulnerable individuals, not to mention the impact of increased inflation on millions of citizens.
