Crypto VCs urge portfolio companies to pull funds from Silicon Valley Bank

Crypto-focused venture capital investors have advised their portfolio companies to withdraw funds from Silicon Valley Bank, which is struggling to reassure clients after moves to shore up its balance sheet spooked investors. The warnings come even as startups in the sector scramble for viable banking options.

Spokespeople for Mechanism Capital and Eden Block confirmed they have advised portfolio companies to withdraw funds held at SVB. Pantera Capital, the hedge fund and venture investor, is telling portfolio firms to explore multiple accounts, a spokesperson confirmed. Two additional venture capital investors in crypto have issued similar advice to startups they’ve backed, but asked not to be named due to commercial sensitivities.

SVB did not immediately respond to a request for comment.

The news comes after a precipitous decline in the shares of SVB Financial Group, the bank’s parent company, which fell more than 60% on Thursday. The sell-off came after the company announced a $1.75 billion stock offering earlier this week, in addition to a separate $500 million common stock purchase by private equity firm General Atlantic, in an effort to shore up its balance sheet.  

Peter Thiel’s Founders Fund had already advised portfolio companies to withdraw funds from the ailing lender, according to a Bloomberg report earlier today.

SVB’s struggles come with crypto startups already seeking banking options, after the demise of crypto-friendly Silvergate Bank earlier this week. 

Technical issues

Some of the people spoken to by The Block also cited technical difficulties relating to SVB accounts.

A web3 startup founder, who requested anonymity to speak candidly, told The Block he struggled to log into his account. Another crypto venture capitalist, who declined to be named, reported a similar issue. Multiple Twitter users have also flagged this issue. 

SVB is the bank of choice for a vast swath of venture-backed tech startups in the U.S. It has more than 2,600 fintech clients alone, according to its website. But a souring in the venture capital market over the past year has proven challenging for the bank. SVB’s CEO Greg Becker urged clients to “stay calm” on a conference call earlier today, Bloomberg reported.