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Hundreds of venture capital firms pledge to work with Silicon Valley Bank again if new owner is found

TechTechnologyHundreds of venture capital firms pledge to work with Silicon Valley Bank again if new owner is found
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A sign hangs at the headquarters of Silicon Valley Bank on March 10, 2023 in Santa Clara, California.

Noah Berger | AFP | Getty Images

More than three hundred venture capital firms have signed a joint statement pledging to do business with Silicon Valley Bank again if it is “bought out and properly capitalised”. financial institution failed on Friday.

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regulator Close After a run on the bank on SVB and Thursday, it confiscated its deposits on Friday.

Prior to the bank failure, SVB CEO Greg Baker had announced the need for a sudden increase. $2.25 billion To shore up the financial institution’s balance sheet overnight on Wednesday. A dramatic wave of deposit withdrawals followed on Thursday.

The bank’s shares fell and trading was halted on Friday before California state regulators took charge.

The SVB failure is the largest failure in US banking since the 2008 financial crisis and the second largest ever.

Some venture firms withdrew their money and instructed their portfolio companies to withdraw their deposits from the SVB before moving. Those allegedly doing so included Founders Fund, USV and Coatue.

Other venture investors lamented that the directives from the influential firms, even if prudent in a way, contributed to the running down of a bank that had for decades been a trusted financial partner for tech startups and the firms that invested in them. Was.

The Federal Deposit Insurance Corporation (FDIC) will cover up to $250,000 per depositor and can begin paying depositors under that limit as soon as Monday. However, it remains to be seen how much of the deposits on SVB’s balance sheet will see a full or partial recovery, and whether there is an immediate buyer ready to acquire the bank’s operations.

in 2008, JPMorgan Chase Washington Mutual Bank was acquired in a transaction facilitated by the FDIC.

As reported by CNBCBig names in tech and finance are calling on the federal government to take dramatic action to protect depositors who were not covered under the $250,000 insured limit. Their main concern is that failure to protect deposits of more than $250,000 could lead to a loss of confidence in other medium-sized banks.

Venture firms including Accel, Cowboy Ventures, Greylock, Lux Capital, and Sequoia were among 325 firms that signed a letter in California as of Saturday evening expressing their willingness to work again with SVB under the new ownership.

The joint statement was shared on social networks by several individual venture capitalists following the bank failure. It said:

Silicon Valley Bank has been a trusted and long-standing partner to the venture capital industry and our founders. For over forty 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 unfolding in the last 48 hours are extremely disappointing and worrying. In the event SVB is purchased and properly capitalised, we will strongly support and encourage our portfolio companies to resume their banking relationships with them.”

read the statement and Full list of investors Expressing support for SVB.

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