The rapidly unfolding fallout at Silicon Valley Bank comes at a challenging moment for the tech industry. “SVB is the most important capital provider to tech startups and the biggest supporter of the community,” he said in a tweet. Villi Iltchev, a partner at Two Sigma Ventures, similarly said his peers should “support” the bank. I know it’s scary…What matters is that we don’t have or create mass hysteria.” While urging people to stay calm, however, he added, “I know some have already withdrawn money. Mark Suster, a partner at venture capital firm Upfront Ventures, urged those in the VC community to “speak out publicly to quell the panic” around Silicon Valley Bank, saying in a lengthy Twitter thread that “classic ‘runs on the bank’ hurt our entire system.” Other prominent venture capitalists had called for calm in an apparent bid to avoid fueling panic. “We couldn’t log in to our accounts, couldn’t contact anyone, their helpline rang to a “disconnected” message or just hung up… none of our account reps would respond to calls or emails.” “The entire SVB system was down,” she told CNN. Sethi urged founders to “hold your assets in the most liquid traditional banks, and do not take unnecessary risks.” He also recommended founders “call every debt line, close all primary rounds, do it now, and be willing to make concessions.”īut by time Tyrner’s company tried to pull funds, it was too late, she said. “Since risk is nonzero and the cost, it’s better to diversify your risk, if not all.” “Any bank with a business model is dead if everyone moves,” Sethi wrote in a memo to founders, which he shared on Twitter. Tribe Capital, meanwhile, urged companies to be mindful of where they keep their money and how they fundraise. (A Founders Fund rep declined CNN’s request for comment). Kaufman said all sales from this point forward “allow us to generate the cash needed to continue operations so we can continue to deliver unforgettable family memories.”Įven before the collapse, a number of startups were said to have weighed pulling their money from the bank, according to media reports and public posts from venture capitalists.įounders Fund, an influential venture capital firm founded by billionaire Peter Thiel, reportedly advised its portfolio companies to pull money from the bank. “Or you can pay full price without the code– which is also appreciated,” he wrote. He added: “no docs, no terms, just send money.”Īt least one company attempted to get money quick, by offering a last-minute sale.īen Kaufman, co-founder of the venture-backed toy store and online retailer Camp, said in an email to customers that “most of our company’s cash assets” were held “at a bank which just collapsed.” In the same email, Kaufman announced a 40% off deal on all online merchandise for customers using the code: “BANKRUN.” “Our top priority is to get our customers’ employees paid as soon as we possibly can, and we’re working diligently toward that on all available channels, and trying to learn what the FDIC takeover means for today’s payments,” he wrote on Twitter.Īrjun Sethi, an investor at Tribe, tweeted Friday that “right now VCs are writing emails to disclose SVB exposure.” Meanwhile, Sam Altman, the CEO of OpenAi and former president of startup accelerator Y Combinator, said investors should consider offering “emergency cash to your startups that need it for payroll or whatever.” Parker Conrad, the CEO and co-founder of HR platform Rippling, said Friday that his company has learned that some customers’ payrolls are being delayed due to the bank’s “solvency challenges.” “The FDIC covers 250K, but am I going to recover my whole 8 figures?” “Now that the bank has folded, I just want to know what happens next,” Ashley Tyrner, founder of health food delivery company FarmboxRx, told CNN in an e-mail. The move capped off a stunning 48 hours during which uncertainty about the prominent tech lender’s liquidity prompted some startups to weigh withdrawing funds and also sparked fears of a contagion risk for the broader financial industry.įollowing the bank’s collapse on Friday, uncertainty in the startup community only grew, with founders worrying about getting their money out, making payroll and covering operating expenses. Silicon Valley Bank collapses after failing to raise capital SVB Financial Group bonds are plunging alongside its shares after the company moved to shore up capital after losses on its securities portfolio and a slowdown in funding. Silicon Valley Bank headquarters in Santa Clara, California, US, on Thursday, March 9, 2023.
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