More than 100 venture capital and investing firms have signed a statement supporting Silicon Valley Bank, part of mounting industry calls to limit the fallout of the bank’s collapse and avoid a possible “extinction-level event” for tech companies.
As of Saturday afternoon in San Francisco, about 125 venture firms including Sequoia Capital had signed on to the statement, spearheaded by venture firm General Catalyst, according to a person familiar with the matter. First released Friday by a smaller group of signatories, the statement called the events of the last two days “deeply disappointing and concerning,” and said that the investors would continue relationships with the institution if it were bought by another entity.
Also on Saturday, the startup incubator Y Combinator posted a petition signed by hundreds of founders and chief executives to US Treasury Secretary Janet Yellen and other regulators, asking for “relief and attention to an immediate critical impact on small businesses, startups, and their employees who are depositors at the bank.” The petition asked for small businesses that had deposited funds at Silicon Valley Bank to be made whole, and for Congress to “restore stronger regulatory oversight and capital requirements for regional banks.”
On Friday, a group of investors for high-profile firms met over Zoom in a series of meetings, according to one person familiar with the discussions. General Catalyst Chief Executive Officer Hemant Taneja posted the resulting statement on Twitter following the meetings, indicating the support of Kleiner Perkins, Khosla Ventures and others. In the hours that followed more than 100 other firms signed on, including Sequoia, said one of the people, who asked not to be identified because the discussions were private.
“Silicon Valley Bank has been a trusted and long-time partner to the venture capital industry and our founders,” the statement reads. “For forty years, it has been an important platform that played a pivotal role in serving the startup community and supporting the innovation economy in the US.”
General Catalyst’s Taneja told Bloomberg that it was important for tech leaders to communicate and agree on a “consistent approach that we hope can maintain business continuity for our companies.” He added: “Everyone understands that we have a role to play in trying to calm the situation.”
Taneja also said that “the run on the bank was an unintended consequence of many investors trying to do the right thing for their own companies” and that “panic wasn’t the way to handle it.” He said he wished that investors had guided companies to take three to six months operating capital out of the bank, rather than advising them to pull out all of their cash.
Many tech leaders have been in touch with lawmakers and regulators since the collapse of SVB, encouraging them to focus on the companies and jobs that are at risk because of the crisis.
For VCs and startups, the mood in Silicon Valley heading into the weekend was dark. On Saturday morning, investors, founders and executives across the tech industry canceled weekend plans to try to contain the fallout from Silicon Valley Bank’s collapse for their companies and firms.
Many investors took to Twitter and other channels to advocate for support for SVB depositors. Y Combinator President Garry Tan on Friday called the bank’s collapse an “extinction-level event” for companies and tweeted a call for regulators to step in.
On Friday night, many investors and startup founders attended a webinar with US Congressman Ro Khanna, a Democrat from Santa Clara, California, that lasted more than two and a half hours. One person who attended said that Khanna expressed frustration with the White House for staying quiet on the issue. A representative for Khanna said he took 70 questions, and that the meeting mostly focused on helping startups make payroll.
On Saturday, the congressman tweeted that he was urging the White House and Treasury Department to do “whatever is legally permissible” to support the bank.
--With assistance from Hannah Miller.
©2023 Bloomberg L.P.
