Did DEI Die in Silicon Valley? How the Collapse of SVB Fuelled a Global Backlash And Why We Need DEI 2.0
Tech has always been obsessed with failure, but some failures reveal more about us than the systems that break. The collapse of Silicon Valley Bank wasn’t just a financial shock; it was a stress test of our cultural fault lines. In the hours after the bank run began, before regulators stepped in, one narrative spread faster than the balance-sheet data: that diversity, equity and inclusion had somehow killed a 40-year institution. It didn’t. But the speed with which the myth travelled exposed something bigger about who gets blamed when systems crack and why the next era of inclusion needs a different architecture entirely.
Nearly two years on, why revisit the collapse of Silicon Valley Bank (SVB)? And what does a bank founded in Santa Clara have to do with DEI in the rest of the world? Because when SVB fell, it didn’t just take down a bank. It took down a symbol.
SVB was one of the few financial institutions in the innovation economy that had publicly and consistently backed underrepresented founders. Its collapse didn’t just trigger a banking panic; it accelerated a global cultural and political backlash against DEI that organisations are still recovering from.
But to understand why, we need to start with what actually happened.
What Really Happened at SVB?
In March 2023, SVB disclosed that it had sold a $21 billion bond portfolio at a loss and needed to raise $1.75 billion in capital. This exposed years of mismanaged interest-rate risk: the bank had over-invested in long-dated government securities that sharply lost value as rates rose.¹
The reaction was instant. SVB’s networked depositor base, venture-backed startups and VCs pulled $42 billion in a single day, the fastest bank run in US history.² On 10 March, regulators shut the bank down. It became the largest bank failure since 2008.³
This was the story: balance sheet mismanagement plus network contagion. Not DEI. Not ESG. Not “wokeness.” Yet DEI quickly became the scapegoat.
Why SVB Mattered for DEI
SVB was unusual in the banking landscape. It intentionally supported founders that mainstream finance regularly underserved or ignored.
It ran the Access to Innovation programme to expand diverse talent pipelines,⁴ partnered with women-led and minority-led funds, and as AP News and Forbes documented was “one of the few banks” offering early credit to women, Black, Latinx, immigrant and LGBTQ+ founders.⁵⁶
This mattered in a deeply unequal funding environment:
Women-founded startups received 1.9% of global VC funding in 2022.⁷
Black founders in the US saw funding fall 71% from 2021 to 2023.8
SVB was not perfect, but it was meaningful infrastructure in a broken system. Its collapse disproportionately hurt founders with the fewest safety nets.
The “Woke Failure” Narrative And Why It Spread Anyway
Within days, right-wing political figures blamed SVB’s collapse on “wokeness.” Florida Governor Ron DeSantis argued the bank was “too focused on DEI.”9 Media commentators echoed the claim that diversity efforts distracted from risk management.
But the Federal Reserve’s own investigation was unequivocal and found no evidence that SVB’s commitments to diversity, equity or inclusion contributed to its failure.10
In fact, several analyses pointed out that the rapid mass withdrawals were triggered by Silicon Valley’s wealthiest, most networked VCs including Peter Thiel, a point not featured in anti-DEI narratives.11
Still, the myth stuck. SVB became, as The Economic Times put it, a conservative “poster child of woke failure.” And that fiction had global consequences.
How SVB Became a Cultural Permission Slip
SVB collapsed during an already-tense cultural moment. Many tech leaders were fatigued by internal pressure from the BLM, MeToo and Stop Asian Hate movements. Publicly, firms maintained inclusive language; privately, group chats, Slack channels and investor circles widely documented by journalist Ben Smith were shifting toward anti-DEI sentiment.11
SVB provided the psychological opening “If this DEI-friendly bank failed, maybe DEI is bad business.” It wasn’t true but it was convenient.
Across 2023–2024, we saw: DEI budgets quietly cut, inclusive hiring targets downgraded, DEI roles disproportionately eliminated during layoffs, retreat from gender and race–focused initiatives, rising attrition among underrepresented talent.
McKinsey’s Women in the Workplace 2024 report found a “sharp decline” in promotion rates for women of colour.12
SVB didn’t cause the backlash. But it accelerated it by giving critics a narrative hook.
Where Are We Now?
As we approach the two-year anniversary of the collapse, political sentiment is shifting again.Whilst anti-DEI initiatives have taken hold and been implemented in some regions, the most aggressive DEI rhetoric has somewhat faded from the conversation. Research continues to show strong correlations between inclusive cultures, innovation and financial performance. Meanwhile, ESG and human-capital transparency regulations are increasing organisational accountability.
But we are not going back to 2020 - 2021. And we shouldn’t! Something broke, not just a bank, but the belief that DEI could be sustained through statements, pledges or symbolic programmes. This is the moment for DEI 2.0, a smarter, more strategic and more operationally grounded approach.
DEI 2.0 or Collective Ecosystems - What It Actually Is
The next era of inclusion needs a name that reflects what the first era could not achieve: durability, shared responsibility and system-level design. Whether we call it DEI 2.0, Community Ecosystems or Collective Ecosystems, the shift is the same. Moving from a model centred on programmes, language and symbolic commitments to one focused on how organisations actually work, make decisions, allocate power and create belonging at scale for everyone. DEI 1.0 asked companies to “care”; this evolution asks them to build: build systems that distribute opportunity, build cultures that reduce harm, and build networks of institutions that reinforce rather than isolate inclusive practice. It recognises that inclusion cannot live in a department, depend on a hero institution or be upheld only during moments of social pressure. The new model treats equity as infrastructure; interconnected, operational and resilient - designed to strengthen entire ecosystems rather than temporarily support specific groups. Here is a breakdown of what this ecosystem could look like.
1. Inclusion that is not a zero-sum game
DEI 1.0 often framed inclusion as “supporting disadvantaged groups,” inadvertently reinforcing the misconception that some groups must lose for others to win.
Collective Ecosystems recognise that inequality harms entire systems, not just specific groups, that inclusion requires nuanced analysis of needs, not broad labels and safety must extend to everyone, even those who fear DEI conversations. This is not softness, it’s systems design.
2. From optics to operations
DEI 1.0 was communications-heavy and structurally light. Collective Ecosystems are embedded into product and service development, algorithmic accountability, risk and compliance, governance and leadership capability and incentives. If a company’s products, data pipelines and internal power structures are not inclusive, no number of mission statements will fix the problem.
3. From “hero institutions” to resilient ecosystems
SVB’s collapse showed the fragility of relying on a single inclusive actor. Collective Ecosystems build distributed capital pathways, cross-sector partnerships, multi-node talent pipelines and decentralised community infrastructure. Resilience comes from networks, not figureheads.
4. Accountability over aspiration
The commitments made after 2020 faded too easily. This next era would require measurable KPIs, transparent reporting, external audits and executive ownership. Without accountability it will collapse under cultural pressure.
5. Have the conversation, even if it is difficult
People shut down when they feel shamed or excluded, even if they do hold privilege. The new position of Collective Ecosystems would prioritise evidence-based dialogue, depolarisation tools, debate and not cancellation with shared responsibility. This is how societies rebuild trust.
The Bottom Line
SVB’s collapse matters because it revealed how fragile DEI progress truly was and how quickly misinformation can reshape social and corporate behaviour.
But it also created an opportunity.
DEI 2.0 must be more rigorous, more operational and more globally connected than what came before. If we build it well, it will be far harder to dismantle the next time the world looks for a convenient scapegoat.
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Footnotes
Federal Reserve Board, Material Loss Review of Silicon Valley Bank (2023)
https://oig.federalreserve.gov/reports/board-material-loss-review-silicon-valley-bank-sep2023.htmFortune – “SVB depositors tried to withdraw $42 billion in one day”
https://fortune.com/2023/03/11/silicon-valley-bank-run-42-billion-attempted-withdrawals-in-one-day/?utm_source=chatgpt.comWikipedia – “Collapse of Silicon Valley Bank”
https://en.wikipedia.org/wiki/Collapse_of_Silicon_Valley_Bank?utm_source=chatgpt.comSVB Access to Innovation program https://www.prnewswire.com/news-releases/silicon-valley-bank-introduces-access-to-innovation-to-increase-opportunities-for-underrepresented-people-in-the-innovation-economy-300928387.html
AP News https://19thnews.org/2023/03/women-minority-business-owners-silicon-valley-bank/ https://apnews.com/article/silicon-valley-bank-race-immigrants-98bc1692beddfa69d862b7e3cfe547e4
Forbes coverage on SVB supporting underrepresented founders
https://www.forbes.com/sites/rebekahbastian/2023/03/13/the-silicon-valley-bank-collapse-disproportionately-impacts-underbanked-founders/TechCrunch - Women Founded Startup Raised 1.9% of all VC funds in 2022. https://techcrunch.com/2023/01/18/women-founded-startups-raised-1-9-of-all-vc-funds-in-2022-a-drop-from-2021/
Crunchbase – Black founder funding decline
https://news.crunchbase.com/diversity/venture-funding-black-founded-startups-2023-data/Governor Ron DeSantis public statements, March 2023
https://www.businessinsider.com/republicans-blame-woke-politics-for-silicon-valley-banks-collapse-2023-3 https://www.nbcnews.com/politics/politics-news/go-woke-get-broke-even-financial-crisis-culture-wars-trump-economics-rcna74692Federal Reserve investigation – no evidence DEI caused failure
https://oig.federalreserve.gov/reports/board-material-loss-review-silicon-valley-bank-sep2023.pdf?utm_source=chatgpt.comAnalyst reports on depositor behaviour https://www.bloomberg.com/news/articles/2023-03-15/silicon-valley-bank-tests-vcs-run-exposes-rifts-in-typically-chummy-world?embedded-checkout=true https://www.theguardian.com/commentisfree/2023/mar/15/silicon-valley-bank-failure-conservatives-blame-wokeness https://stanfordeconreview.com/2023/06/11/long-form-commentary-the-true-cause-of-silicon-valley-banks-collapse/
Ben Smith – The Group Chats That Changed America https://www.semafor.com/article/04/27/2025/the-group-chats-that-changed-america
McKinsey – Women in the Workplace 2024 https://www.mckinsey.com/featured-insights/diversity-and-inclusion/women-in-the-workplace
