Several VC firms have advised their portfolio companies to pull money from troubled Silicon Valley Bank following a surprise announcement that the bank, a key lender to technology start-ups, was issuing $2.25 billion of shares to bolster its capital position after a significant loss on its investment portfolio, according to a report by Bloomberg.
Several VC firms have advised their portfolio companies to pull money from troubled Silicon Valley Bank following a surprise announcement that the bank, a key lender to technology start-ups, was issuing $2.25 billion of shares to bolster its capital position after a significant loss on its investment portfolio, according to a report by Bloomberg.
An unnamed Bloomberg source has identified Peter Thiel’s Founders Fund, as well as Coatue Management, Union Square Ventures, and Founder Collective as being among the VC firms recommending that portfolio companies withdraw their money. Another major VC firm, Canaan, has told its portfolio companies to remove their cash on an “as-needed basis”, according to another source.
In a conference all on Thursday, Greg Becker, the CEO of Silicon Valley Bank owner SVB Financial Group reportedly asked the bank’s clients, including venture capital investors, to “stay calm” and support the business the way it has supported its customers over the past 40 years.
SVB’s shares plunged 60 per cent on Thursday and continued to fall in pre-market trading on Friday, triggering a broader banking sell-off in Europe and Asia, with the BBC reporting falls of 5.6% and 3.5% respectively, in shares of HSBC and Barclays.
