The dust has yet to settle on the largest bank run in US history, a meltdown that in just 48 hours cannibalized a tech-focused startup. Silicon Valley Bank. But there is already a heated debate in the venture capital community and investors are choosing their side.
On Friday, a group of more than two dozen venture capital firms issued a joint statement supporting the Silicon Valley bank. The statement came significantly after – not before – the FDIC regulators Close the bank And he took control.
And the posthumous offer of support continues to grow. By midday Saturday, more than 100 investment firms had added their name to the joint statement. There are also some notable absences on the list, including a16z, Founders Fund, Sequoia Capital, and Y Combinator.
General Catalyst and Managing Director Hemant Taneja wrote in a post Several venture capital leaders gathered on LinkedIn on Friday to discuss the fallout from the Silicon Valley bank collapse. Dozens of the best known names in the venture capital space issued a joint statement expressing support as well as disappointment.
The initial group included Accel, AltCap, B Capital, General Catalyst, Elad Gil, Greylock, Khosla Ventures, Kleiner Perkins, Lightspeed Venture Partners, Mayfield Fund, Redpoint Ventures, Ribbit Capital, and Upfront Ventures.
Silicon Valley Bank has long been a trusted partner to the venture capital industry and its founders. For forty years, it has been an important platform that has played a pivotal 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 disturbing. Should SVB and its capital be appropriately purchased, we would be very supportive and encourage our portfolio companies to resume their banking relationship with them.
Notably, the group urges its portfolio companies to not be too comfortable with any financial institution to which they have transferred their assets and to be willing to move their capital back into SVB if it is purchased and adequately funded. In the past couple of days, several companies have admitted to pulling their assets out of the SVB to other banks – both traditional and digital – such as JPMorgan Chase and Mercury. Several startups have shared with TechCrunch that they have seen an increase in demand and conversions.
While many expressed support for the move, others noted in the comments below the LinkedIn post that the effort was too little, too late.
“I wish these VCs had been locked together and kept their deposits, their Portco deposits in SVB and ‘keep it cool,’” Sanjay Josalia, Head of Product at SVB, commented on the LinkedIn post. “They have now probably lost a valuable banking partner who has served them unconditionally.” Or condition during difficult times, but they will lose in the new banking relationships. They basically betrayed their partner and shot themselves in the foot.”
