A sign hangs at the Silicon Valley Banks headquarters in Santa Clara, California on March 10, 2023.
Noah Berger | AFP | Getty Images
More than three hundred venture capitalists have signed a joint statement pledging to do business again with Silicon Valley Bank if it is “purchased and capitalized appropriately” after the financial institution went bankrupt on Friday.
Regulators shut down SVB and seized its deposits on Friday after a bank run on Thursday.
Prior to the bank’s collapse, SVB CEO Greg Becker announced a sudden need to raise $2.25 billion to shore up the financial institution’s balance sheet overnight Wednesday. A dramatic wave of deposit withdrawals followed on Thursday.
The bank’s shares tumbled and triggered a trading halt on Friday before California state regulators took over.
SVB’s failure is the largest in the US banking industry since the 2008 financial crisis and the second largest on record.
Some venture capitalists withdrew their own money and asked their holding companies to withdraw their deposits from SVB before the race. It would seem that Founders Fund, USV and Coatue were among those who did.
Other venture capitalists lamented that guidance from influential companies, even cautious in some way, contributed to the run on a bank that had long been a trusted financial partner for tech startups and corporations. who have been investing in it for decades.
The Federal Deposit Insurance Corporation (FDIC) will cover up to $250,000 per depositor and may begin paying depositors below that cap as early as Monday. It remains to be seen, however, how much of the deposits on SVB’s balance sheet will see full or partial recovery, and whether there is an immediate buyer ready to acquire the bank’s operations.
In 2008, JPMorgan Chase acquired Washington Mutual Bank in an FDIC-facilitated transaction.
As CNBC reported, big names in tech and finance called on the federal government to take dramatic action to protect depositors who weren’t below the $250,000 insured cap. Their main concern is that a failure to protect deposits of more than $250,000 could lead to a loss of confidence in other mid-sized banks.
Venture capital firms such as Accel, Cowboy Ventures, Greylock, Lux Capital and Sequoia were among the 325 companies that signed the letter Saturday night in California, expressing their willingness to work with SVB again under new ownership.
The joint statement was shared by many individual venture capitalists on social media following the bank’s failure. It said:
Silicon Valley Bank is a trusted and long-standing partner of the venture capital industry and our founders. For forty years, it has been an important platform that has played a central role in serving the startup community and supporting the innovation economy in the United States.
The events that have unfolded over the past 48 hours have been deeply disappointing and concerning. In the event that SVB were to be acquired and appropriately capitalized, we would strongly support and encourage our portfolio companies to resume their banking relationship with them.”
Read the statement and the full list of investors expressing their support for SVB.