The dust hasn’t settled yet on the biggest bank failure in US history, a collapse that toppled a Silicon Valley bank focused on tech startups in just 48 hours. But already a debate is raging in the venture capital community and investors are choosing sides.
On Friday, a group of more than two dozen venture capital firms issued a joint statement backing Silicon Valley Bank. The statement was made specifically after Federal Deposit Insurance Corporation regulators shut down the bank — and not before.
And the posthumous show of support is growing. By noon Saturday, more than 100 businesses had added their names to the joint statement. There are also some notable absences on the list, including a16z, Founders Fund, Sequoia Capital, and Y Combinator.
In a post on LinkedIn on Friday, General Catalyst and Managing Director Hemant Taneja discussed several venture capital leaders following the collapse of Silicon Valley Bank. Dozens of some of the biggest names in venture capital have issued a joint statement expressing their support and disappointment.
The initial group includes 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-term partner to the venture capital industry and our founders. For nearly four decades, 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 of the last 48 hours have been very sad and disturbing. If SVB is to be acquired and properly capitalized, we strongly support our portfolio companies to continue their banking relationship with them.
In particular, the group urged their portfolio companies not to be uncomfortable with any financial institution they have transferred their assets to and to be prepared to return their capital to SVB if they are bought and adequately funded. In the last two days, many companies have admitted that they have transferred their assets from SVB and to other banks – traditional and digital – such as JPMorgan Chase and Mercury. And, several startups shared with TechCrunch that they’ve seen an increase in interest and transfers.
While many expressed support for the move, others in the comments below the LinkedIn post said the effort was too little, too late.
“I wish these very similar VCs would block together and put their deposits, portco money with SVB and ‘stay calm,'” commented Sanjay Ghosalia, head of product at SVB, in a LinkedIn post. “Not only have they now lost a valuable banking partner who has served them unconditionally through difficult times, they will be underserved in new banking relationships. They have basically betrayed their partner and undoubtedly shot themselves in the foot.”