Austin tech bro’s newsletter may have triggered collapse of Silicon Valley Bank, reports say

An Austin tech bro’s newsletter may have triggered the collapse of California-based Silicon Valley Bank (SVB), Fortune theorizes in a new report.

Bryne Hobart, author of the venture capital-focused newsletter The Diff, told his more than 50,000 paying subscribers on Feb. 23 that SVB had a debt-to-asset ratio of 185 to 1, essentially suggesting the bank was bank insolvent, according to Fortune.

After SVB missed earnings the wake of Hobart distributing his newsletter, depositors rushed to get capital out of the bank, leading to its collapse, the magazine further reported.

If you’ve been following the fallout, you know that the bank’s failure led to a market panic and Justice Department investigation.

Evan Armstrong, lead writer of business-focused newsletter Napkin Math, laid out the connection between Hobart’s February newsletter and SVB’s implosion in a recent tweet.

Armstrong noted that venture capitalists and investors began watching SVB closely following Hobart’s claims that the bank might be undercapitalized. “Pretty much every VC I know” reads The Diff, he added. 

Regardless of how big a role Hobart had in the nation’s largest bank collapse since the 2008 Financial Crisis, the ramifications of SVB’s failure are being felt in San Antonio.

At least two Alamo City startups, Plus One Robotics and Secure Logix, have been unable to access deposits in SVB since its collapse, the Express-News reported Tuesday. Plus One Robotics reportedly has $50 million tied up in the bank.

This week, President Joe Biden said that those with accounts in SVB would have access to that money starting Monday. Markets appear to have calmed on Tuesday following the prior day’s sell-off.

Even so, Jason Schenker — president of the Futurist Institute and Austin-based Prestige Economics — warned tech insiders during a Saturday session at SXSW that the bank’s collapse might not be the last.

“Where there is one cockroach, there are usually more,” he said.

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This article appears in Mar 8-21, 2023.