Exactly that. I am wondering why the “pressure” to generate more yield or any yield at all. It is counterintuitive to me to view the startups deposits as investments and not as saved money to be used later, hence no need for a risky or any yield (even if part of the savings will be washed by inflation year over year)
Why would a bank take your money and go to the trouble of managing it if they didn’t plan on using it for something? The purpose of a bank is to lend money. They need deposits to do that.
In this case you’re sort of right in that they found have hedged a bit more by diversifying into more shorter term assets.
I think there is a little more to it. I don’t know about SVB but Deutsche Bank had a solid business doing pretty unexciting banking. Then the CEO got a big ego and pushed for larger returns which made them do more risky stuff and eventually fail. So it’s basically a big ego or just plain greed
It's not clear under what conditions the startups gave money to SVB. It could be they just put into a checking account and SVB then invested it in a risky manner.
