(Bloomberg) -- Alfred Chuang, general partner at Race Capital, should’ve been elated when the last bit of capital came in for his venture firm’s new $181 million fund. But there was just one problem—the limited partners had sent their wire transfers to Silicon Valley Bank right as it started to implode. 

Race, which specializes in early stage crypto and tech investments, was rushing on March 9 to pull its money from Silicon Valley Bank, where it kept 100% of its funds. Chuang said the firm made the decision after hearing chatter the previous night over email, Twitter and phone calls from chief executive officers of public companies. He also had concerns about how the bank was handling the crisis.

“We can't take that kind of risk on our LPs’ money, so we must get out,” he said of the decision. 

Race successfully pulled all its funds from Silicon Valley Bank on the morning of March 9 and placed them in accounts the firm had previously opened with other banks, according to Chuang. He then turned to helping Race’s portfolio companies—three of which had their money with SVB.

“I had founders crying on the phone,” Chuang said.

One company was able to extract all of its funds, another got part of its money out and the third, like so many others, had the entirety of its capital trapped at SVB on March 10 when regulators took over the bank. Chuang told the company’s founder he would personally extend a credit line to make sure payroll was covered. 

Chuang said he had worked with Silicon Valley Bank since the 1990s and that Race had used SVB since the firm opened in 2019. Over the weekend after the bank’s collapse, Chuang heard from his LPs that the the wire transfers for the firm’s $181 million fund had been sent to SVB after Race had withdrawn its funds. Chuang said he and his team spent a tense weekend trying to track down the money and following news developments.

“My arms are numb, literally, because I spent so much time sitting on my desk waiting for the phone to ring,” he said. 

On March 12, the government backstopped SVB and Race was able to retrieve the money and close its fund the following day. The fund, the second for the firm, has already made 10 investments, including in Sematic, a machine-learning developer platform, and digital wallet Ottr Finance. Chuang said the firm is interested more than ever in  decentralized technologies, especially after the collapse of crypto exchange FTX, which Race had invested in.

Even though Race is forging ahead, the disruption caused by SVB will likely make it difficult for startups, especially those at the later stages, to get funding in the next 12 months, Chuang said. The bank was the “go-to place” for tech, and had support for most payroll systems as well as no wire transfer fees. They also offered loans to startups and operated a major venture arm. 

“The large banks, they don't have these services,” he said. 

(Corrects spelling of Chuang’s name in the seventh paragraph.)

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