New data analyzed by Fortune reveals that SVB, which was the financial institution of choice by an estimated 50% of all startups, also custodied assets for some 1,074 private equity and venture capital funds in recent years.
The data, compiled by Castle Hall Diligence and based on public annual SEC filings, shows that 1,074 private equity and venture capital firms—including Andreessen Horowitz, General Catalyst, Accel, and Benchmark—were storing at least some portion of assets from a collective 5,994 funds by year-end in 2021. The nearly 6,000 funds represent a collective $863 billion in assets, though the portion of capital being held specifically at Silicon Valley Bank is unknown and would be a much smaller figure.
While SEC-registered venture or PE firms do have to disclose which banks they use to store assets from each fund, they don’t have to report how much is specifically held at Silicon Valley Bank, versus the other banks they use. And since firms are only required to report these figures once per year, the analysis was based on the latest available data—meaning that the data may not be an entirely accurate representation of each firm’s holdings with SVB at the time of its collapse.
That said, the data offers a comprehensive picture of SVB’s dominant position in the private markets not only as a major lender to private funds, but also as one of the most prominent custodians for VC firms. As venture capitalists are legally required to “custody” their fund assets at a financial institution, they use “custodians,” which are banks like SVB that will monitor and safekeep the capital and ensure it is not stolen or lost. As a fund calls capital from its limited partners, custodians will hold onto it until a fund is ready to deploy it—meaning that the amount of money a venture fund has at the bank is usually well below the overall size of the fund at any given time.
“The document shows the scale and footprint of Silicon Valley Bank,” says Chris Addy, founder and CEO of Castle Hall Diligence. “This is really unique to have 6,000 funds with relatively small banks—that’s something that doesn’t exist for bonds, hedge funds or real estate."
Silicon Valley Bank, the 16th largest bank in the U.S., was relatively small in comparison to financial institutions like Bank of America or JPMorgan Chase. Even so, its customer base was hyper-concentrated on the world of startups and venture capital. The data shows Silicon Valley Bank’s customer base spanned the gamut of top-tier venture and private equity firms, with a roster that included Andreessen Horowitz, General Catalyst, Union Square Ventures, Thrive Capital, Two Sigma, Accel, Benchmark, Seven Seven Six, and Flybridge Capital Partners, among more than 1,000 others that span from real estate or infrastructure investors to accelerator funds like Techstars.
SVB custodied assets for some 1,074 private equity and venture capital funds in recent years, according to data compiled by Castle Hall Diligence and based on public annual SEC filings.
View the entire 46-page document here.
Now questions are arising as to whether SVB’s concentration on such a specific, niche market was a liability—particularly as the bank’s investments during the venture boom in 2021, then pullback in 2022, sparked some severe problems on SVB’s balance sheet as interest rates started climbing.
Addy says the whole industry will be thinking a lot more carefully about an industry being so highly concentrated with a single financial institution, as evidently, it was not a good idea in this case.
“I think it’s going to cause a lot of questions just as to how that concentration emerged,” he says.
Fortune reached out to the aforementioned venture and private equity firms but had not received a response prior to publication.
While some VC firms may have started using other banks since the beginning of 2022, custodian relationships are typically pretty sticky, as it usually requires additional costs to make a change, and could temporarily disrupt day-to-day operations. However, it’s likely some VC firms may have moved their assets to another custodian earlier this week over widespread panic that SVB may collapse.
All of the capital held at Silicon Valley Bank is currently under the Federal Deposit Insurance Corp. freeze. The agency has begun an auction for SVB, with final bids due by Sunday afternoon, according to Bloomberg. The FDIC said it plans to make 100% of protected deposits available on Monday. It will also pay uninsured depositors an “advance dividend within the next week,” but it’s still unclear what that will amount to and when it will arrive.
Here are some of the biggest funds that housed at least some portion of their capital with SVB, per their latest SEC filings: