The dust has yet to settle in the largest bank run in U.S. history, a collapse that in just 48 hours dismantled the tech startup-focused Silicon Valley Bank. But already a debate is raging in the venture capital community and investors are picking sides.
On Friday, a group of more than two dozen venture capital firms issued a joint statement that supports Silicon Valley Bank. The statement was notably after — and not before — Federal Deposit Insurance Corporation regulators closed the bank and took control.
And the posthumous show of support keeps growing. By midday Saturday, more than 100 venture firms had added their names to the joint statement. There are also some noticeable absences on the list, including a16z, Founders Fund, Sequoia Capital and Y Combinator.
General Catalyst and managing director Hemant Taneja wrote in a post Friday on LinkedIn that several venture capital leaders met to discuss the aftermath of Silicon Valley Bank’s downfall. A dozen of some of the best-known names in venture capital issued a joint statement that expressed 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 been a trusted and long-time partner to the venture capital industry and our founders. For forty years, it has been an important platform that played a pivotal role in serving the startup community and supporting the innovation economy in the US.
The events that unfolded over the past 48 hours have been deeply disappointing and concerning. In the event that SVB were to be purchased and appropriately capitalized, we would be strongly supportive and encourage our portfolio companies to resume their banking relationship with them.
Notably, the group is urging their portfolio companies to not get too comfortable with whatever financial institution they have moved their assets to and to be prepared to move their capital back to SVB if it is purchased and adequately funded. In the past two days, many companies have admitted to pulling their assets out of SVB and into other banks — traditional and digital — such as JPMorgan Chase and Mercury. And several startups have shared with TechCrunch that they have seen increased demand and transfers.
While many expressed support for the move, others noted in comments below the LinkedIn post that the effort was too little, too late.
“I wish these very same VCs would have banned together and kept their deposits, their portco deposits at SVB and “stayed calm,” Sanjay Gosalia, head of product at SVB, commented on the LinkedIn post. “They now have not only very likely lost a valuable bank partner that has served them unconditionally through tough times but will go underserved in new bank relationships. They fundamentally betrayed their partner and have undoubtedly shot themselves in the foot.”