Silicon Valley Bank isn't just a bank

Greetings from San Francisco. The tech world is panicking over Silicon Valley Bank. But first…Today’s must-reads:• Discord adopts OpenAI fun [View in browser]( [Bloomberg]( Greetings from San Francisco. The tech world is panicking over Silicon Valley Bank. But first… Today’s must-reads: • Discord [adopts]( OpenAI functions • Oracle [reports]( wavering demand • Researchers call for transparency into the [carbon footprint of AI]( “Stay calm” Silicon Valley Bank was founded in 1983 and over the decades became the go-to financial institution for startups. Today, it’s a household name in the Bay Area, deeply enmeshed in tech companies’ networks and infrastructure. SBV isn’t just a bank — it makes equity investments, patronizes startups’ services and sponsors lavish industry parties. This week, though, phones across the startup world are blowing up with the same question: Should we move our money? The trouble started on Wednesday after SVB took [steps]( to shore up capital following losses stemming from the larger tech downturn. By Thursday morning, the bank’s chief executive officer, Greg Becker, was urging clients to “[stay calm.](” Many investors and banking clients failed to take his message to heart. The company’s stock [plunged 60%]( during the day Thursday, shedding almost $10 billion, and then fell as much as 30% in after-hours trading. Partners at prominent venture firms reached out to their portfolio companies — in some cases [urging them to pull their money out of the bank](. Among the firms advising caution were Peter Thiel’s Founders Fund, Coatue Management and Union Square Ventures. But while Thursday’s chaos felt sudden, skittishness about SVB had been percolating in some corners of the industry for months. My colleague [Lizette Chapman reviewed an email]( sent by Greenoaks Capital Partners' Neil Mehta to portfolio companies back in November warning that banks, including SVB, might get caught short. The problem, Mehta feared, was that institutions were offering higher interest rates to customers to avoid losing clients to competitors. But they weren’t well-positioned to do this because they made a large number of long-term, low-interest loans that were still outstanding, he wrote. Mehta also voiced what many in the investing world now fear: that SVB may not be the only bank to stumble. Already this week, crypto lender Silvergate Capital Corp. said it [planned to shut down](. On Thursday, the S&P 500 Financials Index slumped 4.1% — its worst day since mid-2020. And shares of San Francisco’s First Republic Bank fell 17%. Notably, in his email, Mehta warned about First Republic. The bank declined to comment late last night. Small- and medium-sized banks could find themselves in a particularly delicate position. As my Bloomberg [colleagues write](: “Rising interest rates have left banks laden with low-interest bonds that can’t be sold in a hurry without losses. So if too many customers tap their deposits at once, it risks a vicious cycle.” Christopher Whalen, chairman of Whalen Global Advisors, said small banks could take a “terrible kicking.” Said Whalen: “Silicon Valley Bank is just the tip of the iceberg.” Despite Thursday’s chaos, there was no shortage of tech leaders defending SVB — thanks in part to the outsize role the institution has played in the industry. Some urged their compatriots not to abandon SVB in its time of need. G Squared founder Larry Aschebrook [called it]( “truly unfortunate” that VCs were advising companies to pull out money, “making a tough situation for SVB worse by pressing the panic button.” Others were less diplomatic. Ava Labs President John Wu said his company had already diversified away from its reliance on SVB, and recommended others do the same. “This is a classic bank run,” Wu [said in an interview]( on Bloomberg Television, “and when the bank run starts, you don’t want to be the last guy there.” Venture firm Tribe Capital was one of the firms advising its portfolio companies to move some, if not all, of their balances from SVB on Thursdsay. “I am getting bad looks from other VCs about it,” said Tribe co-founder Arjun Sethi. “But none of them are objecting.” –[Anne VanderMey](mailto:avandermey@bloomberg.net), [Edward Ludlow](mailto:eludlow2@bloomberg.net) and [Lizette Chapman](mailto:lchapman19@bloomberg.net) The big story Walmart is courting affluent shoppers with its online subscription service [in a bid to chip away at Amazon’s corner of the retail market](. Get fully charged Intel's troubles are worrying even the most bullish of investors, and the chip giant has by far [the most sell ratings in the Nasdaq 100 Index](. FTX's engineering chief bought a deluxe six-bedroom home last year, but has now forfeited the house to the US government [over concerns that the property is linked to criminal activity at the collapsed crypto exchange](. The New York Attorney General's office is [suing Seychelles-based crypto exchange KuCoin]( for operating in the state without a license. German luxury-car maker BMW has appointed a new chief financial officer as [the company shifts to electric vehicle production](. Bloomberg Television examines the [Fed's new crypto team](. More from Bloomberg Listen: [Foundering: The John McAfee Story]( is a new six-part podcast series retracing the life, the myths and the self-destruction of a Silicon Valley icon. Subscribe for free on [Apple](, [Spotify]( or wherever you get your podcasts. 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