https://www.semafor.com/article/03/09/2023/some-vc-firms-are-urging-founders-to-pull-money-from-troubled-silicon-valley-bank

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Liz Hoffman and Reed Albergotti
Mar 9, 2023, 4:08pm ESTMar 9, 2023, 4:08pm EST
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Some VC firms are urging founders to pull money from troubled Silicon
Valley Bank

[26fa5404a5edc3f4030fdc1ccf8750ac294a7a15-5000x3333]Getty Images/
Rafael Henrique/SOPA Images/LightRocket
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The Scoop

Some tech industry founders got emails from their venture-capital
investors on Thursday urging them to move their money out of Silicon
Valley Bank, according to people familiar with the matter, adding
pressure to the already troubled firm.

Some entrepreneurs and venture funds themselves have already done so,
opening new accounts on Thursday at other firms, including First
Republic and Brex, to transfer money out of SVB, according to people
familiar with the matter and documents reviewed by Semafor.

Silicon Valley Bank didn't immediately respond to a request for
comment.

The lender, a pioneer in the startup banking industry, lost $1.8
billion in a firesale of $21 billion of bonds, which were bought just
before rising interest rates made them less valuable. It has been
trying to raise $1.75 billion in fresh cash while Moody's downgraded
its credit rating.

Venture capitalists who spoke to Semafor on the condition of
anonymity said they believed the bank would be able to remain
solvent, but were fearful of a run on the bank.

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On Thursday, SVB CEO Gregory Becker told clients on a conference call
not to worry, according to a person familiar with the matter. The
call was earlier reported by The Information.

Some startups may have restrictions, tied to loans, on how much money
they can withdraw from the bank, one venture capitalist said.

Silicon Valley Bank offers loans to startups that help them continue
doing business without having to raise additional funds by selling
shares. This lending has become a big business for SVB, inviting
competition from larger players like JP Morgan in recent years.

SVB also offers low interest loans and mortgages to entrepreneurs and
venture capitalists, helping it bolster its reputation in the tech
industry.

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