Mar 22, 2023
Venture Capitalists Convince Startups to Keep Money With New SVB
(Bloomberg) -- Venture capitalists have largely kept the promise they made the day after Silicon Valley Bank dramatically collapsed: They would continue doing business with the bank if it was able to continue operating.
In a private call on Tuesday, the new chief executive officer of Silicon Valley Bridge Bank, Tim Mayopoulos, said that private markets have been instrumental for the institution in maintaining its deposit base, according to a readout of the call reviewed by Bloomberg. During the conversation with the Institutional Limited Partners Association, a trade association, Mayopoulos said that VCs had returned significant deposits that were moved from the bank when it was in crisis, and were publicly encouraging portfolio companies to do the same.
The ILPA declined to comment.
In the chaotic hours shortly after the bank collapsed, many VCs signed onto a statement calling for the bank to be saved, and saying they would keep money with the new iteration of it. Last week, General Catalyst CEO Hemant Taneja tweeted a follow-up statement co-signed by many of the same investors, recommending that portfolio companies keep 50% of their deposits with the new SVB.
High-profile investors have voiced their support for Silicon Valley Bank. In an interview with Bloomberg Television, investor Vinod Khosla said he was encouraging companies to keep funds with the bank and stressed that their “money was safe” there.
In a statement, a representative for General Catalyst said, “From the start we have been advising portfolio companies to keep approximately 50% of deposits in the bank. Many venture firms are giving that guidance to their companies.” The firm has emphasized that SVB is an important piece of Silicon Valley infrastructure. Adding: “In fact, we have been using them in current investing activity.”
(Updates with VC comment in the final paragraph.)
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