A group of venture capital firms is reportedly working to reclaim parts of Silicon Valley Bank.
Companies in talks to preserve the failed bank — known for its service of tech sector clients — include General Catalyst, Andreessen Horowitz and Khosla Ventures, the Financial Times (FT) reported Monday (Mar. 13), citing people with knowledge of the matter.
According to the FT, the firms have been in discussions since last week — when Silicon Valley Bank was shut down and taken over by regulators — about how to allow it to keep lending to and investing in tech sector companies.
The report notes that the plan to resurrect parts of SVB underline its importance in the venture capital (VC) world to the same companies accused last week of leading a run on the bank.
As PYMNTS’ Karen Webster wrote Monday, VCs — the same companies that had pumped tens of billions of dollars into SVB between 2020 and 2022 — sent mass emails to their portfolio companies in the days leading up to SVB’s collapse ordering them to pull their deposits.
“Some very quick-on-the draw startups managed to do that successfully,” Webster wrote. “For most, the weekend was one filled with uncertainty about if, when and how much of their deposits would be recovered.”
Meanwhile, at least one VC executive interviewed for the FT story said the rescue effort is an uphill battle, with forms focused on making sure their portfolio companies are liquid, and SVB clients moving onto new banks.
“Even if the most powerful venture people shout, I don’t know how many [chief financial officers] at companies will be wiring their money back to whatever’s left [of SVB],” the executive said.
PYMNTS looked at the downfall of SVB — as well as two other recent banking failures, Silvergate Capital and Signature Bank — Tuesday in a conversation with Drew Edwards, CEO of money mobility payments company Ingo Money.
He said that what happened with SVB will lead companies to ask whether their money is safe. However, it’s not the size of the bank that’s important, but the makeup and diversification of that bank’s customer base.
SVB’s failure, “had a lot to do with their heavily concentrated customer base,” Edwards said. “And it was also a small, tight-knit community connected to each other online and communicating in channels all day long that enabled such a quick run for the door.”