Peter Thiel’s Founders Fund and a handful of other venture capital firms have advised their portfolio companies to pull money from Silicon Valley Bank.
| Peter Thiel’s Founders Fund and a handful of other venture capital firms advised their portfolio companies to pull money from Silicon Valley Bank on Thursday ,Founders Fund, a prominent VC firm co-founded by billionaire Thiel, has asked its companies to move their funds, says a person familiar with the matter who requested anonymity.
Mr Becker held a roughly 10-minute call with investors. He asked the bank’s clients, including venture capital investors, to support the bank the way it has supported its customers over the past 40 years, the person said.Worries surrounding the lender ricocheted around Silicon Valley on Thursday. There is “a good deal of panic,” said Jenny Fielding, managing partner at The Fund, which invests in early-stage companies.
Venture firm Tribe Capital has also advised its portfolio companies to move some, if not all, of their balances from SVB. “What’s important to understand is that banks all have leverage, and they use deposits, so almost by definition any bank with a business model is dead if everyone moves,” Tribe co-founder Arjun Sethi told portfolio companies: “Since risk is nonzero and the cost is tiny, better to diversify your risk if not all”.
SVB’s shares sank as much as 60 per cent at the close on Thursday, hitting their lowest level since September 2016. Mr Becker’s call was reported earlier by The Information. The shares continued to tumble in late trading.Some VCs said they were standing by the bank. Investor Keval Desai, founder of Shakti, said not only was he not telling his portfolio companies to withdraw funds, but he placed an order to buy the bank’s stock today, with a limit order of $US101.
“What do we know about banks you would switch to? Are they in better or worse shape?” he said he advised. “It is a pain to switch, but it is more of a pain if the bank fails.”
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