The bank relied on wholesale funding, was heavily concentrated on the tech industry, and had lower capital requirements and lower regulatory scrutiny than larger banks, all of which contributed to its failure. Early indications are that the actual bank failure was initiated by an asset-liability mismatch as opposed to any issues derived from the mispricing of underlying assets.

Specifically:

• On 8 March, the bank announced plans to raise $2.25 billion in capital to fund deposit outflows and shore up losses from sales of securities that were underwater due to the rise in yields over the last year.
• The outflows were primarily due to the bank’s unique customer base, namely venture capital (VC) funds and VC-funded start-ups. Historically, cash burn rates on the deposit balances were offset by additional venture capital (VC) funding, but VC funding has dried up in this environment. Hence, these start-ups increasingly relied on their deposits.

You can now read the full whitepaper at the link below