VCs declare their loyalty in the wake of the collapse of the SVB

by Ana Lopez

The dust has not yet settled on the biggest bank run in US history, a collapse that dismantled the technology startup-focused Silicon Valley Bank in just 48 hours. But a debate is already raging in the venture capital community and investors are taking sides.

On Friday, a group of more than two dozen venture capital firms issued a joint statement supporting Silicon Valley Bank. Notably, the statement came after — not before — Federal Deposit Insurance Corporation regulators closed the bank and took control.

And the posthumous messages of support continue to grow. By Saturday afternoon, more than 100 venture firms had added their names to the joint statement. There are also some notable absentees from the list, including a16z, Founders Fund, Sequoia Capital, and Y Combinator.

General Catalyst and General Manager Hemant Taneja wrote in a message Several venture capital leaders gathered on LinkedIn on Friday to discuss the aftermath of Silicon Valley Bank’s demise. A dozen of some of the best-known names in venture capital have issued a joint statement expressing both support and disappointment.

The first group consisted of 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

The statement reads:

Silicon Valley Bank is a trusted and long-standing partner of the venture capital industry and our founders. For 40 years, it has been an important platform that has played a vital role in serving the startup community and supporting the innovation economy in the US.

The events that have unfolded in the last 48 hours have been very disappointing and worrying. In the event that SVB were purchased and appropriately capitalized, we would strongly support and encourage our portfolio companies to resume their banking relationship with them.

In particular, the group urges their portfolio companies not to get too comfortable with whichever financial institution they have moved their assets to and to be prepared to return their capital to SVB if it is purchased and adequately funded. In the past two days, many companies have admitted that they have moved their assets out of SVB and into other banks – traditional and digital – such as JPMorgan Chase and Mercury. And several startups have shared with that they’ve seen increased demand and transfers.

While many expressed support for the move, others commented in comments below the LinkedIn post that the effort was too little and too late.

“I wish these same VCs had been banned together and kept their deposits, their portco deposits with SVB and ‘kept calm,'” Sanjay Gosalia, head of product at SVB, commented on the LinkedIn post. very likely to have lost a valuable banking partner who helped them unconditionally through difficult times, but will also become underserved in new banking relationships, fundamentally betraying their partner and undoubtedly shooting themselves in the foot.”

Learn more about SVB's 2023 collapse on TechCrunch

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