Investors told Forbes they’re now focused on damage control such as ensuring portfolio startups can make payroll with the bank’s uninsured deposits now frozen.
A customer stands outside of a shuttered Silicon Valley Bank headquarters on March 10, 2023 in Santa Clara, California.they’re now focused on damage control such as ensuring portfolio startups can make payroll with the bank’s uninsured deposits now frozen.n Friday, Silicon Valley Bank’s rich 40-year history came to an abrupt, ignominious end as regulators closed the bank and appointed the Federal Deposit Insurance Corporation as its receiver.
Many founders and VCs said that, to their knowledge, attempts to withdraw capital from SVB Wednesday and through Thursday afternoon had gone smoothly. Others, who attempted to withdraw in the evening and into Friday, however, were unclear as of lunchtime Friday whether they’d get their funds anytime soon.A request for comment to an SVB spokesperson and an external PR representative was not immediately answered.
Founders, meanwhile, compared notes on their ability to withdraw funds over Signal and Telegram groups. For those unacquainted with how the startup ecosystem raises and holds capital, SVB’s reach might be hard to appreciate. Many funds, from the large well-known ones to new, emerging funds, kept their own cash raised with the bank; their partners often used SVB for their own banking, too, or for mortgages. Startups, meanwhile, kept much or all of the money they in turn had raised and called from investors with SVB.
Asked whether their warnings – and the subsequent outflows from the bank – had accelerated its demise, the leader of another large firm argued that SVB, and the bank alone, should bear responsibility. “It’s the company’s job to convince the market that there shouldn’t be a panic. SVB completely fucked this up. They decided to take all these losses without a financing solution in place, and now they’re blaming the market,” they said. “You don’t blame the consumer for taking money out of the bank.
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