#51 Bank Blockbuster

SVB shuts down, impacting VCs, CFOs, Tech, Macro

Hi Everyone. It’s been a crazy week. 👋

Welcome to the new members of @TheFundCFO crew. Every M/W/F, we bring you actionable tools, real-world experiences, and insider insights for #VC CFOs and fund managers, #LP investors, and general industry enthusiasts/people who want to learn :).

“Silicon Valley Bank (“SVB”) is shut down by regulators in biggest bank failure since global financial crisis”

It’s been a wild week for VC GP’s, fund finance professionals, startups, the tech industry, banks, investors, and anyone connected to these sectors, especially the last 48 hours.

As noted in the headline above, SVB, a top-20 US bank just 48 hours ago, was shut down earlier today. We know many of you have been working tirelessly to protect company balance sheets, investor capital, and portfolio companies.

While it’s impossible to predict what will happen next, we hope to start next week with more clarity and a solution that minimizes the impact. In the meantime, we’ve collected relevant headlines and quotes for your weekend reading.

“On Wednesday, Silicon Valley Bank was a well-capitalized institution seeking to raise some capital. Within 48 hours, a panic induced by the very venture capital community that SVB had served and nurtured ended the bank’s 40-year-run.”

SANTA CLARA, CALIFORNIA - MARCH 10: A Brinks armored truck sits parked in front of the shuttered Silicon Valley Bank (SVB) headquarters on March 10, 2023 in Santa Clara, California. Silicon Valley Bank was shut down on Friday morning by California regulators and was put in control of the U.S. Federal Deposit Insurance Corporation. Prior to being shut down by regulators, shares of SVB were halted Friday morning after falling more than 60% in premarket trading following a 60% declined on Thursday when the ban

Bank Run: $42b was withdrawn from SVB yesterday, representing ~25% of the bank’s $175b in deposits

“Startup Bank Had a Startup Bank Run” (Matt Levine, Money Stuff)

SVB’s capital stack looked roughly like this, as of Dec. 31:

  • A tiny sliver of insured deposits (that is, deposits under the $250,000 FDIC limit), something like $8 billion worth out of $173 billion of total deposits.

  • Roughly $165 billion of uninsured deposits. 

  • Roughly $13 billion of “short-term borrowings,” meaning mostly Federal Home Loan Bank advances.

  • Roughly $2 billion of long-term FHLB advances.

  • Roughly $3 billion of long-term bonds.

  • Maybe $4 billion of other liabilities, for a total of $195 billion of liabilities.

  • About $3.6 billion of preferred stock.

  • Common stock with a book value of about $12.4 billion and a market value, on Dec. 31, of about $13.6 billion.

That’s all for today folks! Thanks for your support and spreading the word! Share this on Twitter or LinkedIn to help grow “the crew!”