Silicon Valley Bank
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Twitter exploded on Thursday afternoon with concerns about storied institution Silicon Valley Bank.
Some investors are imploring their startups to pull their money out of the bank.
SVB CEO Gregory Becker told clients on a Thursday call to stay calm.
By Thursday afternoon, the tweets started rolling in. Silicon Valley is losing faith in its go-to bank SVB Financial.
“OK i am hearing from dozens of founders about what to do at SVB. It’s an all out bank run,” founder Howard Lerman wrote.
“Every company I know is scrambling to get their cash balances under 250k and the rest of cash off-platform or into big bank funds ASAP,” tweeted founder Alex Miller.
“All the VCs sending panic DMs around pulling money out of SVB means there’ll be a good ol’ run on probably the biggest, blue-chip bank in tech. Some companies will either get wrecked or have liquidity problems. Not good for tech,” wrote another founder.
SVB saw its stock price plummet more than 60% on Thursday. That came after the bank completed a $21 billion firesale of its bond portfolio, which led to a loss of $1.8 billion, thanks to higher interest rates and other factors. Because of this loss, SVB said it would raise about $2 billion from investors by selling stock and issuing related securities. This caused some VCs and founders to worry about the financial strength of their banking institution.
SVB lends money to startups and keeps their cash deposits, so they can pay staff and other expenses. If startups are worried the bank can’t give them all their money back from their bank accounts, then they might pull their accounts. In essence, a bank run — Silicon Valley style.
The media relations and investor relations departments of SVB did not return an email seeking comment on Thursday. SVB CEO Gregory Becker told clients on a Thursday call to stay calm and that there’s no need to worry, according to a report from The Information.
Some founders who bank with SVB say they’re not concerned — yet.
“For what it’s worth: LOOP banks with SVB — and will remain with SVB. End of story,” co-founder and CEO John Henry wrote on Twitter. The car insurance startup founder told Insider in an interview that he’s been fielding calls from his most “level-headed” investors worried about the predicament the bank finds itself in, but for now has decided to stay put.
“We spent some time today with our VP of finance assessing the actual risk here, thinking it through and plotting out some pathways forward,” he said. “We took a look at their actual balance sheet, and it does look like in the event of a material run they could be vulnerable. But I think it’s important that SVB has been a really important stakeholder in the world of venture.”