As most of you have seen in the news, Silicon Valley Bank (SVB) was closed by regulators over concerns about its solvency. While this failure has affected SVB clients, many of whom are venture capitalists and tech companies, Zscaler has not experienced any negative impact to our business operations or ability to service our customers.
To provide some added context, SVB was put into receivership with the Federal Deposit Insurance Corporation on Friday, one day after its stock declined precipitously and the bank experienced a run on deposits by its customers. In simple terms, this means that a large number of SVB depositors, fearing that the bank will be unable to repay their deposits in full and on time, simultaneously withdrew their funds. Those events were triggered by SVB’s report of a $1.8 billion loss from the sale of investments and plans to raise $2.25 billion in equity capital.
Although SVB had been our banking partner in the past, our current banking partners are among the largest, most stable global banks, and our deposits at SVB currently represent less than 0.1% of our $1.9 billion of cash and investments. In fact, the vast majority of our $1.9 billion is not held in bank deposits at all, but rather in extremely safe and liquid investments like short-term US Treasuries or government money market funds.
Fortunately for those impacted, the US government just announced it will step in to backstop SVB depositors, with depositors having full access to their cash as early as Monday.