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Silicon Valley Bank used financial sweeteners and strategic networking to attract both venture capitalists and their nascent tech companies. That strategy powered spectacular growth for decades—and left the sector extraordinarily vulnerable when the
SVB, founded in 1983, offered banking services to startups that often weren’t profitable, in some cases didn’t even have a product, and would otherwise have a hard time getting a line of credit or a loan from a larger bank. Venture-capital firms banked with SVB too, often encouraging their portfolio companies to do the same.
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