[ajross]

> 1) SVB was not managed by VC's.

I think this is very much in question. Silicon Valley Bank was absolutely part of a cohesive microeconomy. There's no other explanation for the absolutely uniformity with which all those startups were using it for what should have been 100% commodity banking services. Those startups all banked with SVB because their VCs told them to.

And the VCs told their startups to bank with SVB because... we don't know yet. But any time you have a signal this strong, there's a driver.

Add to that the fact that the moment all those startups seemed likely to lose banking services, however temporarily, those same VCs freaked the fuck out of their minds on twitter and started shrieking in all caps about the end of western capitalism. That's not mere concern for their poor startups (most of whom were going to fail anyway, after all -- they're startups!). These VCs were exposed to the SVB failure. They were leveraged somehow and about to get caught holding the bag.

There was some kind of insider dealing going on with SVB. It wasn't just a bank. We for sure know that much. Whether we have criminal fraud or not is an open question.

[noitanigami]

SVB made loans to cash-rich companies approximate to their funding rounds, when they were least likely to immediately use the cash. These loans typically required the company to hold the money as a deposit in SVB. These deposits were used to buy long duration bonds.

In other words, SVB used these companies to produce new money that they could earn interest on.

[ajross]

Yeah, that's the kind of thing I'm imagining. Though it doesn't explain the VC tweetpanic unless they were getting kickbacks. Is there a cite for that, or a story posted somewhere?

[noitanigami]

https://twitter.com/jonwu_/status/1634250770555219970

[belter]

Bill Ackman publicly admitted on Twitter to be on the hook for at least 10% of his assets.

[blackoil]

That most probably means, he and his companies kept his cash in SIVB and not that he has stake in it.

[nullc]

One element is that the banking industry as a whole behaves pretty chaotically with 'unusual' customers.

Big wire in from a fundraising round? Account frozen. Big wire out for an acquisition? Account frozen. Bank learns your customers include cryptocurrency companies? Account frozen. Bank account balance huge relative to your business' cashflow? Account frozen. Random bank staff doesn't understand what you're doing? Account frozen.

In that kind of climate its almost inevitable that VC's would recommend a single bank known to not behave erratically for the activities that are usual for their investments.

[qwertyuiop_]

This a great point. Why did the VCs force startups to use SVB and not others for commodity banking ? Anyone know what SVB did and others couldn’t?