Venture Capital: Troubles At Silicon Valley Bank Trigger Warnings From Top Drawer VC Firms
Moody’s had downgraded the credit rating for both SVB and its subsidiary, Silicon Valley Bank, due to “a deterioration in the bank’s funding, liquidity and profitability.”
Silicon Valley Bank (NASDAQ: SIVB), a major lender to start-ups, has faced a crisis after announcing a $2.25bn share sale following a significant loss on its portfolio. The company’s shares fell by 60% and its bonds posted record declines. The shock development sent tremors through the venture capital world, with many top VC firms advising their portfolio startups to bail out from Silicon Valley Bank (SVB).
These included Peter Thiel’s Founders Fund, Canaan, Coatue Management, Founder Collective and Union Square Ventures. (Bloomberg, via Moneycontrol)
However, Silicon Valley Bank CEO Greg Becker urged clients to stay calm, and held a conference call to reassure them that their deposits were safe.
Garry Tan, CEO of Y Combinator, warned start-ups in its network that solvency risk is real and that they should consider limiting their exposure to SVB. Other venture firms, such as Activant Capital and Tribe Capital, sent emails and texts to their portfolio companies, encouraging them to transfer their SVB balances to other lenders, and helping them move their capital.
Ava Labs President John Wu said that his company had already diversified away from its reliance on SVB.
However, some VCs, such as Larry Aschebrook, founder of G Squared, and Keval Desai, founder of Shakti, stood by the bank, stating that it had supported entrepreneurs and GPs at all stages of their businesses.
Meanwhile TechCrunch reported today that several Silicon Valley Bank customers are facing difficulty withdrawing their funds from the bank, following news that the bank lost $1.8 billion in the sale of US treasuries and mortgage-backed securities.
Some users are reporting difficulty accessing their accounts, and account access controls have been restricted to “view-only” for some.
Despite this, SVB CEO Greg Becker has assured clients that the bank has ample liquidity to support its customers.
Related Story: Silvergate Announces Voluntary Liquidation
Image credit: Wikimedia Commons
Latest Alternative Investment News
Digital Assets: Ledger, Maker Of Crypto Security Hardware, Raises Nearly All Of $100M Series C Round
Paris-based startup Ledger, which makes hardware wallets for cryptocurrency investors, has raised €100m ($109m) in funding, valuing the company at €1.3bn. The round was led by investors including Digital Finance…
FinTech: Cogo And Eliq Partner To Help Banking Customers Enhance The Energy Efficiency Of Their Homes
Cogo, a fintech which collaborates with banks to assist customers in decreasing their carbon footprint as a carbon footprint management firm, is partnering with Eliq, a company that specializes in…
Venture Capital: The LSP Dementia Fund Closes €260M (US$283M) To Address Dementia, One Of The Most Significant Health Crises Of Our Era
The LSP Dementia Fund has reached a final close at €260 million (US$ 283 million), surpassing its initial target of €100 million. The fund, which is managed by EQT Life…
Artificial Intelligence: The DAGGER AI Model Gives Advance Warning Of Dangerous Solar Storms
Researchers have developed an AI-based model that combines satellite data and machine learning to predict where an impending solar storm will strike on Earth, offering 30 minutes of advance warning….