After the financial institution went bankrupt on Friday, more than 300 venture capital firms signed a joint statement pledging to do business again with Silicon Valley Bank if it were “acquired and properly capitalized.”
Regulators shut down the SVB and seized deposits on Friday after running at banks on Thursday.
Ahead of the bank’s collapse, SVB CEO Greg Becker suddenly announced Wednesday night that he needed to raise $2.25 billion to bolster the financial institution’s balance sheet. A dramatic wave of withdrawals followed on Thursday.
Bank shares plunged Friday before California regulators took over, sparking a trading halt.
The SVB failure is the largest in the US banking industry since the 2008 financial crisis and the second largest ever.
Some ventures withdrew their own funds before execution and instructed investee companies to withdraw their deposits from the SVB. Founders Fund, USV, Coatue and others have reportedly done so.
Other venture capitalists believe that directives from influential companies, even if in some ways cautious, are long-trusted financial resources for decades of tech startups and the companies that invest in them. He lamented that he had contributed to the crackdown on the bank with which he was a partner.
The Federal Deposit Insurance Corporation (FDIC) will cover up to $250,000 per depositor and could begin paying depositors under that cap on Monday. However, it remains to be seen what portion of SVB’s balance sheet deposits will be fully or partially recovered and whether there will be an immediate buyer ready to buy the bank’s business.
In 2008, JP Morgan Chase acquired Washington Mutual Bank in a transaction facilitated by the FDIC.
As CNBC reports, tech and financial luminaries have called on the federal government to take dramatic steps to protect depositors who haven’t fallen below the $250,000 insurance cap. . Their main concern is that if they can’t protect deposits over $250,000, they may lose confidence in other mid-sized banks.
Venture firms including Accel, Cowboy Ventures, Greylock, Lux Capital and Sequoia, among 325 companies in California that signed the letter as of Saturday night, are working again with SVB under new owners. have expressed their intention to do so.
This joint statement was shared by many individual venture capitalists on social networks after the bank’s collapse. said:
Silicon Valley Bank is a long-standing trusted partner to the venture capital industry and founders. For 40 years, it has been a vital platform serving the startup community and playing a pivotal role in supporting the US innovation economy.
The events that have unfolded over the past 48 hours are both deeply regrettable and concerning. Should SVB be acquired and properly capitalized, we will strongly support and encourage portfolio companies to resume their banking relationships with SVB. ”
statement and Full list of investors Expressed support for SVB.