Investors at some VC firms are urging their portfolio companies to move from Silicon Valley Bank over financial stability concerns.
Silicon Valley Bank sold off $21B of investments, borrowed $15B, and held an emergency stock sale to strengthen finances amid a bleak economic environment for tech clients.
Silicon Valley Bank's stock price plunged by 60% after it sold off $21B of investments, borrowed $15B and held an emergency stock sale to strengthen finances. Its potential failure would be the second-largest in US history.
Other banks' stock prices declined due to concerns of similar issues. KBW Bank Index fell nearly 8%, while Bank of America, Wells Fargo, and JPMorgan Chase dropped between 5.4% to 6.2%.
Investors, including Arjun Sethi, advised companies to withdraw their funds from Silicon Valley Bank to avoid potential loss, according to memos viewed by The New York Times.
Silicon Valley Bank, founded in 1983, has a significant presence in the tech start-up industry, offering banking services, loans, and private wealth management to tech workers.
Start-up investors on Twitter predicted that Silicon Valley Bank might need to be sold or bailed out, but Mark Suster from Upfront Ventures said the bank's only financial risk was a panic leading to a bank run.
Investors including Villi Iltchev and Roseanne Wincek urged the industry to support Silicon Valley Bank by not withdrawing money, while Anshu Sharma advised his portfolio companies to wait and not panic.
Canopy Analytics founder Sunny Juneja tried to move his start-up's cash from Silicon Valley Bank but faced online portal issues.
To avoid the crisis, Silicon Valley Bank is urging its customers not to withdraw their funds, despite a drop in customer deposits.