Peter Thiel Founders Fund Pulled Cash from SVB - Business Insider
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This news article covers the SVB bank collapse of March 2023, a financial event relevant to AI/tech ecosystem stability given SVB's central role in funding venture-backed startups; minimally relevant to core AI safety research.
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Importance: 12/100news articlenews
Summary
Peter Thiel's Founders Fund withdrew all its funds from Silicon Valley Bank (SVB) by Thursday morning before the bank was shut down by the FDIC on Friday, March 10, 2023. The withdrawal was triggered by problems encountered during a capital call transfer. Founders Fund also advised its portfolio startups to pull their funds from the struggling bank.
Key Points
- •Founders Fund had zero SVB exposure by Thursday morning after withdrawing all funds, reportedly triggered by transfer problems during a capital call.
- •SVB collapsed after revealing a $1.8B loss from a $21B fire sale of its fixed-income portfolio and a failed $2.3B capital raise.
- •Rising interest rates hurt SVB's bond holdings and made fundraising harder for its startup client base, accelerating deposit outflows.
- •Founders Fund advised its portfolio startups to also withdraw funds from SVB, contributing to the bank run dynamic.
- •SVB had provided banking services to nearly half of all US venture-backed startups, making its collapse broadly impactful in the tech ecosystem.
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| Founders Fund | Organization | 50.0 |
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Peter Thiel's Founders Fund Pulled Cash From SVB Before Collapse: Report - Business Insider
Tech
Peter Thiel's Founders Fund got its cash out of Silicon Valley Bank before it was shut down, report says
By
Ryan Hogg
Peter Thiel was a cofounder of PayPal.
Marco Bello/Getty Images
2023-03-11T11:40:55.000Z
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Peter Thiel's Founders Fund withdrew all its funds from Silicon Valley Bank, Bloomberg reported.
His VC fund took action after encountering problems with transfers, per the report.
The fund had no cash in with SVB by Thursday morning, Bloomberg reported.
Peter Thiel's Founders Fund had no cash left in Silicon Valley Bank by Thursday as it began to unravel, Bloomberg reported.
A source told Bloomberg the PayPal cofounder's fund had moved to close its exposure to the failing bank after running into problems using SVB's services.
The venture capital group had been engaging in a "capital call" — where it asked investment partners to send funds to invest in a company — by transferring funds to its Silicon Valley Bank account. However, the funds didn't immediately go through as expected.
Following the withdrawals, the fund no longer had any exposure to SVB as of Thursday morning, the unnamed source told Bloomberg. It wasn't clear whether the transfers happened on that day, or earlier.
SVB's share price collapsed after it revealed a $1.8 billion loss Thursday following a $21 billion fire sale of its fixed-income portfolio.
An attempt to raise $2.3 billion to cover those losses failed and the Federal Deposit Insurance Corporation shut it down and took control of customer deposits Friday.
Rising interest rates initiated by the Fed had weighed on the bank's bond offerings, with its 10-year bond spread widening above 1,000 basis points Friday in a sign of distress.
The rising cost of borrowing also made it harder for SVB's core customer base of startups to pick up fresh funding, accelerating outflows.
Thiel's Founders Fund is thought to have propped up several startups that banked with SVB, which provided banking for nearly half of all US vent
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