- a16z said in an email it intended to continue banking with SVB as the bank was “fully operational”.
- The SVB was taken over by the federal government on Friday after a bank run.
- The VC firm said it is working on a “general diversification plan” and will find another bank in the future.
Andreessen Horowitz, one of Silicon Valley’s largest and most respected venture capital firms, told investors today that it will continue to do banking with Silicon Valley Bank “for the foreseeable future” but is preparing a longer-term plan to diversify. The note was sent today and viewed by Insider.
“We have worked closely with the new leadership of SVB (alongside our existing client advisors) and are pleased to report that the bank is now fully operational,” wrote Andreessen Horowitz, commonly referred to as a16z. “As such, we will continue our current activities at SVB – including reissuing capital calls to LPs – for the foreseeable future until we are fully operational at another financial institution.”
The regional bank was taken over by the government on Friday after a bank run. On Monday, the FDIC said no depositors will lose money, even though most of the bank’s customers had accounts that exceeded the agency’s $250,000 insurance coverage threshold. The bank reopened for business on Monday.
A16z has $54.6 billion in assets under management, according to recent SEC filings. Most of it is not stored in cash in bank accounts but in other investments. However, the company closed a staggering $9 billion in new funds by early 2022, and another $4.5 billion new fund for crypto in the spring of 2022. VC firms don’t collect all of this money up front. Instead, they ask their Limited Partner Investors (LPs) to pay in their obligations over time when cash is needed.
While the company said it feels safe enough to use the troubled bank for now, it is also in the process of opening “additional accounts at another financial institution.” A16z did not immediately respond to a request for comment.
Here’s the full memo:
a16z LPs –
Thank you to those who have checked in following the SVB challenges over the past few days. We appreciate your patience as we focus our efforts to ensure our portfolio companies are in good health. We wanted to give you a quick update on our plan for the future.
As noted in the email we sent out over the weekend, we are working on setting up additional accounts with another financial institution; This will be part of an overall diversification plan that we will adopt independently of the eventual sale of SVB. In the meantime we have been working closely with SVB’s new leadership (alongside our existing client advisors) and are pleased to report that the bank is now fully operational. We can access all of our accounts, receive/send transfers, and access our existing lines of credit/funding facilities. We have also confirmed that the FDIC 100% Deposit Guarantee extends to all existing and new funds deposited with the bank (e.g. your capital deposit). Therefore, we do not believe that there is a risk of loss of capital in relation to current or future account balances.
As such, we will continue our current activities at SVB – including reissuing capital calls to LPs – for the foreseeable future until we are fully operational at another financial institution. We will of course be closely monitoring the current situation at SVB and will decide what diversification is appropriate once our new accounts/phone lines are fully set up. We know the FDIC is seeking a solution for SVB that would allow it to continue as a going concern, and we will update you as we better understand the impact.
In the meantime, we are confident that the best solution for a16z, its LPs and its portfolio companies is to continue our current operations at SVB. If you have any questions, please contact Scott Kupor or Jen Kha directly.