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What a total clusterfuck from so many VCs. There was a moment where they could have mustered up a bridge loan to SVB, probably at very favorable terms, saved t

What a total clusterfuck from so many VCs. There was a moment where they could have mustered up a bridge loan to SVB, probably at very favorable terms, saved their companies and acquired some decent assets while they're at it. Instead they DDOSed their own bank, tanked a large portion of their portfolio, and now are asking for a bailout. It seems like the VCs should shore up their companies until SVB is wound down or take the losses. It's not like they don't have the capital.

JumpCrisscross 4y ago
> was a moment where they could have mustered up a bridge loan to SVB, probably at very favorable terms, saved their companies and acquired some decent assets while they're at it One, they couldn’t. It’soutside their mandates; they’d have to raise new funds from LPs. Two, why? Just have your start-ups pull their capital and bank with the countless other banks providing the same services as SVB.
twelve40 4y ago
if a bank becomes so toxic that FDIC had to parachute in in the middle of the day (couldn't even wait til closing) and shut it down, how can this bank be saved with a bridge loan? > SVB “didn’t have nearly as much capital as an institution that risky should have had” https://www.bloomberg.com/news/articles/2023-03-10/svb-spectacularly-fails-after-unthinkable-heresy-becomes-reality https://www.bloomberg.com/news/articles/2023-03-10/svb-spect... blaming the customers for wanting to save their money and claiming as if they were the cause of the bank's recklessness seems really strange.
- MrLeap 4y ago
  If they had more capital, wouldn't that have made them _less risky_? Sounds like a tautology!
  - vineyardmike 4y ago
    They can be risky for other behavior, necessitating capital. If they held less "risky" securities, they wouldn't need incoming cash. Cash makes the risk go away, but so does holding other better assets.
- more_corn 4y ago
  A bank run like this would collapse any bank in the world. I get what you’re saying. But it is literally the fault of the people panicked and withdrew their deposits. And doubly the fault of the people who advised them to do so.
  - NhanH 4y ago
    Faulting the people who withdraw their money is like faulting the fresher who crashes production. Yeah they could have avoided it, but really, this is the discussion point we want to focus on?
  - justahuman74 4y ago
    Some of us work at companies who did a rapid withdrawal, and are sure hoping that's enough that the company doesn't run out of money and do layoffs.
  - shawabawa3 4y ago
    If that's true that's extremely worrying Are you saying every bank in the world has assets significantly less than liabilities due to over exposure on long term low interest rate bonds?
  - lp0_on_fire 4y ago
    No this is literally the fault of a mismanaged Bank causing its depositors to lose confidence. Imagine using this excuse in any other situation: "It's not the food poisoning at my restaurant that's causing me to go out of business it's those darned customers who stopped eating here!"
- nostromo 4y ago
  Thanks to many VCs asking all of their portfolio companies to withdraw at once, SVB had $42b in withdrawal requests on Thursday. On Friday there would have had many more billions if they hadn't ceased taking them. I wonder if any US bank could muster up $100b in 24 hours. (On most days with lots of withdrawals, like on common pay days, banks will see lots deposits too. They aren't one-directional and out of the blue.)
  - twelve40 4y ago
    Nobody owes them their money. That's not the bank's money and if the customers decide that the bank is no longer safe and is engaging in shifty shit the only reasonable thing to do is to take your own money and move it somewhere safe. The bank's whole job is to make sure it doesn't get to that point, and they failed at that. The CEO knew they were going to crash, probably for quite a while now.
stickfigure 4y ago
> It's not like they don't have the capital. I'm not sure you have the right scale in mind. The shortfall associated with this bank may be into the tens of billions. That's a monstrous sum even for SoftBank.
- TheOtherHobbes 4y ago
  SoftBank just keeps picking them.
IG_Semmelweiss 4y ago
No. If you are familiar with LPAs (limited partnership agreements) some have severe restrictions on what types of investments they can make. Moreover, a lot work on committed capital, and have to therefore make capital calls to LPs that are not exactly the easiest at this time of overvalued holdings. I can imagine how that conversation would pan out: "Hello, Mr PIMCO Manager. Hi, we need 80% of your committed capital in less than 2 hours in order to bail out a failing bank in which we are not a shareholder or board member. Oh yes, I don't know how much we need, but its, like, a lot. Unfortunately, we don't have any collateral on this if FDIC takes over, but I'm working on it! Oh yea, about those mark-to-market positions, can we talk about that later please? Can we count on your capital? "
- more_corn 4y ago
  [flagged]
testfoobar 4y ago
Which specific VCs told their clients to pull funds from SVB?
- nostromo 4y ago
  Peter Thiel’s Founders Fund, Coatue Management, Union Square Ventures, Founder Collective, YC, and I’m sure many more.
- eddsh1994 4y ago
  One of the YC partners tweeted it
JKCalhoun 4y ago
You seemed to have made it clear: bridge loan or bailout? Hmmm, that's a tough one.

JumpCrisscross 4y ago

> was a moment where they could have mustered up a bridge loan to SVB, probably at very favorable terms, saved their companies and acquired some decent assets while they're at it One, they couldn’t. It’soutside their mandates; they’d have to raise new funds from LPs. Two, why? Just have your start-ups pull their capital and bank with the countless other banks providing the same services as SVB.

twelve40 4y ago

if a bank becomes so toxic that FDIC had to parachute in in the middle of the day (couldn't even wait til closing) and shut it down, how can this bank be saved with a bridge loan? > SVB “didn’t have nearly as much capital as an institution that risky should have had” https://www.bloomberg.com/news/articles/2023-03-10/svb-spectacularly-fails-after-unthinkable-heresy-becomes-reality https://www.bloomberg.com/news/articles/2023-03-10/svb-spect... blaming the customers for wanting to save their money and claiming as if they were the cause of the bank's recklessness seems really strange.

MrLeap 4y ago
If they had more capital, wouldn't that have made them _less risky_? Sounds like a tautology!
- vineyardmike 4y ago
  They can be risky for other behavior, necessitating capital. If they held less "risky" securities, they wouldn't need incoming cash. Cash makes the risk go away, but so does holding other better assets.
more_corn 4y ago
A bank run like this would collapse any bank in the world. I get what you’re saying. But it is literally the fault of the people panicked and withdrew their deposits. And doubly the fault of the people who advised them to do so.
- NhanH 4y ago
  Faulting the people who withdraw their money is like faulting the fresher who crashes production. Yeah they could have avoided it, but really, this is the discussion point we want to focus on?
- justahuman74 4y ago
  Some of us work at companies who did a rapid withdrawal, and are sure hoping that's enough that the company doesn't run out of money and do layoffs.
- shawabawa3 4y ago
  If that's true that's extremely worrying Are you saying every bank in the world has assets significantly less than liabilities due to over exposure on long term low interest rate bonds?
- lp0_on_fire 4y ago
  No this is literally the fault of a mismanaged Bank causing its depositors to lose confidence. Imagine using this excuse in any other situation: "It's not the food poisoning at my restaurant that's causing me to go out of business it's those darned customers who stopped eating here!"
nostromo 4y ago
Thanks to many VCs asking all of their portfolio companies to withdraw at once, SVB had $42b in withdrawal requests on Thursday. On Friday there would have had many more billions if they hadn't ceased taking them. I wonder if any US bank could muster up $100b in 24 hours. (On most days with lots of withdrawals, like on common pay days, banks will see lots deposits too. They aren't one-directional and out of the blue.)
- twelve40 4y ago
  Nobody owes them their money. That's not the bank's money and if the customers decide that the bank is no longer safe and is engaging in shifty shit the only reasonable thing to do is to take your own money and move it somewhere safe. The bank's whole job is to make sure it doesn't get to that point, and they failed at that. The CEO knew they were going to crash, probably for quite a while now.

stickfigure 4y ago

> It's not like they don't have the capital. I'm not sure you have the right scale in mind. The shortfall associated with this bank may be into the tens of billions. That's a monstrous sum even for SoftBank.

TheOtherHobbes 4y ago
SoftBank just keeps picking them.

IG_Semmelweiss 4y ago

No. If you are familiar with LPAs (limited partnership agreements) some have severe restrictions on what types of investments they can make. Moreover, a lot work on committed capital, and have to therefore make capital calls to LPs that are not exactly the easiest at this time of overvalued holdings. I can imagine how that conversation would pan out: "Hello, Mr PIMCO Manager. Hi, we need 80% of your committed capital in less than 2 hours in order to bail out a failing bank in which we are not a shareholder or board member. Oh yes, I don't know how much we need, but its, like, a lot. Unfortunately, we don't have any collateral on this if FDIC takes over, but I'm working on it! Oh yea, about those mark-to-market positions, can we talk about that later please? Can we count on your capital? "

more_corn 4y ago
[flagged]

testfoobar 4y ago

Which specific VCs told their clients to pull funds from SVB?

nostromo 4y ago
Peter Thiel’s Founders Fund, Coatue Management, Union Square Ventures, Founder Collective, YC, and I’m sure many more.
eddsh1994 4y ago
One of the YC partners tweeted it

JKCalhoun 4y ago

You seemed to have made it clear: bridge loan or bailout? Hmmm, that's a tough one.