Now the tide of money into the tech sector is ebbing, we can see who has no bathers on

‘Silicon Valley Bank tried to get the best of both worlds: it was a deposit-taking institution but also backed startups from seed stage to series A investment.’ A branch of SVB in Santa Clara, California, 10 March 2023. Photograph: Jeff Chiu/AP

Tech companies and their bank of choice are in crisis: there have been widespread layoffs, and Silicon Valley Bank (SVB) recently collapsed. So what went wrong?

Let’s start with tech companies. There are at least two types: “new tech” and “old tech”. The new-tech companies are usually small and dynamic, and their funding mix is predominantly made up of private capital (typically venture capital or angel investors). Conversely, old-tech companies have a more interesting mix of equity and debt to fund their activity – and therefore a more complex relationship with financial markets and institutions. This is partially down to the different levels of risk of the two asset classes, which also drives their different accessibility to retail investors.