More than three hundred venture capitalists signed a joint statement Friday pledging to do business with the Silicon Valley bank again if it is “acquired and adequately capitalized” after the financial institution’s bankruptcy filing.
Regulators closed SVB and seized its deposits on Friday after the bank closed for business on Thursday.
Before the bank collapsed, SVB CEO Greg Becker announced on Wednesday night that the financial institution needed to raise $2.25 billion suddenly to shore up its balance sheet. A sharp wave of deposit withdrawals began on Thursday.
Bank stocks fell, prompting a trading halt on Friday before California state regulators took over.
SVB’s failure was the largest and second largest on record in the US banking industry since the 2008 financial crisis.
Some venture capitalists withdrew their money and asked their holding companies to withdraw their deposits from SVB before the race. Founders Fund, USV and Coatue appear to have been among those who did.
Other venture capitalists lament that directives from influential companies, even if somewhat cautiously, have influenced the bank, which has long been a trusted financial partner for tech startups and corporations. invested in it for decades.
The Federal Deposit Insurance Corporation (FDIC) covers up to $250,000 per depositor and may start paying depositors below that limit on Monday. However, it remains to be seen how much of the deposits on SVB’s balance sheet will be fully or partially recovered and whether there is an immediate buyer ready to buy the bank’s operations.
in 2008, JPMorgan Chase Acquired Washington Mutual Bank in a transaction facilitated by the FDIC.
Tech and financial giants have called on the federal government to take drastic measures to protect depositors of less than $250,000, CNBC reported. Their main concern is that not protecting deposits above $250,000 could lead to a loss of confidence in other medium-sized banks.
Venture capital firms including Accel, Cowboy Ventures, Greylock, Lux Capital and Sequoia were among the 325 companies that signed the letter late Saturday in California that expressed their willingness to work with SVB again under new ownership.
The joint statement was shared on social media by many private venture capitalists following the bank’s failure. It says:
Silicon Valley Bank is a trusted and long-term partner of the venture capital industry and our founders. For four decades, it has been an essential platform that has played a central role in serving the startup community and supporting the innovation economy in the United States.
The events of the last 48 hours have been very sad and disturbing. Provided SVB is properly acquired and recapitalized, we strongly support and encourage our portfolio companies to reestablish their banking relationships with them.
Read the statement and the full list of investors backing SVB.
