A sign hangs at the Silicon Valley Banks headquarters in Santa Clara, California, March 10, 2023.
Noah Berger | AFP | Getty Images
More than three hundred venture capital firms have signed a joint statement promising to do business again with Silicon Valley Bank if it is “bought and adequately capitalized” after the financial institution failed on Friday.
Regulators shut down the SVB and confiscated its deposits on Friday after a run on the bank on Thursday.
Before the bank’s collapse, SVB CEO Greg Becker announced that $2.25 billion would need to be raised overnight Wednesday to shore up the financial institution’s balance sheet. A dramatic wave of deposit withdrawals followed on Thursday.
The bank’s shares plummeted, triggering a halt to trading on Friday before California regulators took over.
The SVB bankruptcy is the largest in US banking since the 2008 financial crisis and the second largest ever.
Some venture firms withdrew their own money and instructed their portfolio companies to withdraw their deposits from the SVB before the run. It reportedly included Founders Fund, USV and Coatue.
Other venture investors lamented that direction from influential companies, while somewhat prudent, contributed to the run on a bank that for decades has been a trusted financial partner for tech startups and the companies that invest in them.
The Federal Deposit Insurance Corporation (FDIC) covers up to $250,000 per depositor and may start paying out depositors under that cap as early as Monday. However, it remains to be seen what part of the deposits in SVB’s balance sheet will be fully or partially realized and whether there is an immediate buyer willing to take over the bank’s operations.
in 2008, JPMorgan Chase acquired Washington Mutual Bank in an FDIC-backed transaction.
As CNBC reported, big names in tech and finance are urging the federal government to take dramatic action to protect depositors not below the $250,000 insurance ceiling. Their main concern is that a failure to protect deposits over $250,000 could lead to a loss of confidence in other mid-sized banks.
Venture firms including Accel, Cowboy Ventures, Greylock, Lux Capital and Sequoia were among the 325 firms that signed the letter Saturday night in California, expressing their willingness to work again with SVB under new ownership.
The joint statement was shared by many individual venture capitalists on social media after the bank collapsed. It said:
Silicon Valley Bank is a trusted and long-standing partner to the venture capital industry and our founders. For forty years it has been a vital platform that has played a pivotal role in serving the startup community and supporting the innovation economy in the United States.
The events of the last 48 hours have been deeply disappointing and worrying. In the event that SVB were purchased and adequately 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 who support SVB.