Police Respond to Founders Gathered Outside SVB's New York Office, Withdrawals Continue & JPM Pens Supportive Note
The Silicon Valley Bank Run: Day 2
This morning, the Silicon Valley Bank crisis continued to escalate. Startup founders and investment firms raced to withdraw their money. CNBC reported that SVB was in talks to sell itself. Rival J.P. Morgan published a supportive analyst note.
I spoke to a major investor who said that about ten of his portfolio companies had pulled out about $1.5 billion collectively from Silicon Valley Bank. The companies put in their requests around 6 p.m. Eastern Time Thursday and got their money this morning.
While there’s a lot of talk of founders pulling their money, one complicating factor is startups that have covenants with Silicon Valley Bank. They’re contractually obligated to keep their money with the bank, but I’ve heard accounts of some companies violating those covenants. After all, possession is nine-tenths of the law.
Founder Dor Levi, a former Lyft executive, first texted me at 8:16 a.m. from outside Silicon Valley Bank’s New York offices.
He said he’d been instructed by a banker at Silicon Valley Bank to go and get a cashier’s check from the New York office if he wanted to move his funds.
Levi wasn’t the only founder who showed up at SVB’s offices looking to pull his money from the bank. “There’s more founders coming every minute,” Levi texted. He said about a dozen founders showed up at the bank this morning.
Levi said SVB wouldn’t let people in and building management threatened to call the police.
At about 9:20 a.m. in New York, Levi sent me a picture of two NYPD cars outside the bank, writing, “They called the police.”
He said the police were very friendly and instructed one person who didn’t want to leave SVB’s offices that they had to exit the building.
Then the police were on their way. “They just left,” he told me in a voice memo.
Then, Levi gave up and left.
Meanwhile, J.P. Morgan’s equity research arm published a supportive analyst note. The firm downgraded its price target from $270 to $177.
SVB’s share price closed at $106.04 Thursday. Trading was halted Friday morning.
“While it’s likely in our view that SVB stock opens much higher than the post-trading session close should the news emerge that the common equity raise was completed, we would be buyers of SIVB shares at this highly attractive valuation. SVB is a world class and highly valuable global franchise and the option to purchase the shares below [total book value] we believe more than adequately compensates investors for the risk being taken,” the report reads.