Silicon Valley Bank is facing challenges in assuring its clients
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Silicon Valley Bank is facing challenges in assuring its clients

written by John Murphy | March 12, 2023

Silicon Valley Bank is facing challenges in assuring its clients but they are taking measures to improve the financial position of the bank, which has raised concerns among the investors.

The Crypto Venture Capitals have suggested the companies in their investment portfolio to take out their funds from Silicon Valley Bank. The advice was brought up after many cryptocurrency startups started searching for reliable banking alternatives.

Representatives from Eden Block and Mechanism Capital have confirmed ordering their portfolio companies to withdraw funds from SVB. Some other significant VCs have given the same advice to crypto startups. Like the Hedge fund and venture investor, Pantera Capital has suggested companies look into multiple bank accounts.

To improve its balance sheet the bank announced a $1.75 billion stock offering, Along with that it also offered a $500 million common stock purchase by private equity firm General Atlantic. Instead, the parent company of Silicon valley bank, SVB Financial, suffered a 60% in its stock value. Following this decline, the company’s stock closed at $106.04 by the end of the trading session.

Despite all that the company still owns assets worth of approximately $212 billion.

The crypto community on Twitter is concerned

Founders Fund is a venture capital firm founded in 2005 by Peter Thiel and his partners. A recent report by Bloomberg revealed that the founder’s fund has already advised its portfolio companies to withdraw funds from SVB. Following the collapse of a crypto bank called Silvergate bank, the startups were looking into different alternative banking options.

Furthermore, the crypto community on Twitter is anxious about the bank issue. They are afraid that if the SVB fails it might have a similar impact to Lehman Brothers.

Lehman Brothers was a financial services firm that collapsed in September 2008 due to its exposure to the subprime mortgage market. The collapse of Lehman Brothers was a significant event in the global financial crisis. This led to a loss of confidence in the financial system and a widespread credit freeze, which contributed to the severity of the recession that followed.

However, the VC of Spark Capital Nabeel Hyatt came forward in the support of SVB saying that the bank was a reliable partner for founders. Hyatt further added “For the startup ecosystems’ benefit I really hope SVB gets through this,”