Silicon Valley Bank’s struggles spell further trouble for beleaguered tech startup market
Signage for high-tech commercial bank Silicon Valley Bank, on Sand Hill Road in the Silicon Valley town of Menlo Park, California, August 25, 2016.
Smith Collection | Gado | Archive Photos | Getty Images
Silicon Valley Bank has long been considered the lifeblood for tech startups, providing traditional banking services while funding projects and companies deemed too risky for traditional lenders. Billions of dollars in venture capital flow into and out of the bank’s coffers.
But the 40-year-old firm’s intimate ties to technology leave it particularly sensitive to the industry’s boom-and-bust cycles, and on Thursday those risks became abundantly clear.
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SVB was forced into a fire sale of its securities, unloading $21 billion worth its holdings at a $1.8 billion loss, while also raising $500 million from venture firm General Atlantic, according to a financial update late Wednesday. After its stock soared 75% in the 2021 market rally, SVB lost two-thirds of its value last year and then plummeted another 60% during regular trading on Thursday.
For the Silicon Valley region, the troubles land at a particularly difficult time. Venture capital deal activity sank over 30% last year to $238 billion, according to PitchBook. While that’s still a historically high number, the dearth of IPOs and continuing drawdown in valuations among once highfliers suggests that there’s much more pain to come in 2023.
As a large regulated bank, SVB has been viewed as a stabilizing force. But its latest financial maneuvers are raising alarm bells among the firm’s client base.
“Psychologically it’s a blow because everyone realizes how fragile things can be,” said Scott Orn, operating chief at Kruze Consulting, which helps startups with tax, accounting and HR services.
Orn called SVB a “crown jewel of Silicon Valley” and a “strong franchise” that he expects to survive this difficult period and even potentially get acquired by a bigger bank. For his customers, which number in the hundreds, a pullback by SVB would likely make it more expensive to borrow money.
“Losing a major debt provider in the venture debt market could drive the cost of funds up,” Orn said.
According to SVB’s mid-quarter update, one of the primary problems the bank faces has to do with the amount of money its customers are spending. Total client funds have fallen for the last five quarters, as cash burn has continued at a rapid pace despite the slowdown in venture investing.
“Client cash burn remains ~2x higher than pre-2021 levels and has not adjusted to the slower fundraising environment,” SVB said.
In January, SVB expected average deposits for the first quarter to be $171 billion to $175 billion. That forecast is now down to $167 billion to $169 billion. SVB anticipates clients will continue to burn cash at essentially the same level as they did in the last quarter of 2022, when economic tightening was already well underway.
Analysts at DA Davidson wrote in a report on Thursday that in terms of spending, “companies have not adjusted to the slower fundraising environment.” The firm has a neutral rating on the stock and said concerns “over a slow to recover VC environment have kept us cautious on SIVB shares.”
S&P lowered its rating on SVB to BBB- from BBB, leaving it just one notch above its junk rating. On Wednesday, Moody’s reduced SVB to Baa1 from A3, reflecting “the deterioration in the bank’s funding, liquidity and profitability, which prompted SVB to announce actions to restructure its balance sheet.”
Concern has quickly turned to the potential contagion effect. Does the bank’s acknowledged misfortunes lead clients to pull their money and house it elsewhere? That question was circling among investors and tech execs on Thursday, even after CEO Greg Becker wrote in a letter to shareholders that, the bank has “ample liquidity and flexibility to manage our liquidity position.”
“More in the VC community need to speak out publicly to quell the panic about @SVB_Financial,” Mark Suster of Upfront Ventures wrote on Twitter. “I believe their CEO when he says they are solvent and not in violation of any banking ratios & goal was to raise & strengthen balance sheet.”
Suster funds the kinds of risk-taking and future-oriented ventures that rely on SVB for banking services.
In the case studies section of the firm’s website, for example, SVB highlights a loan to solar panel provider Sunrun, debt offerings to autonomous construction equipment vendor Built Robotics and financing solutions for ocean drone startup Saildrone.
SVB’s loan losses remain low, meaning that at least for now it’s not facing the kind of credit challenges the bank dealt with during the dot-com crash and financial crisis, when charge-offs soared. Rather, analysts are focused on the deposit side of the house.
“Given the pressure on their end markets, especially the elevated levels of client cash burn, SIVB is seeing continued material outflows of client funds, both on- and off-balance sheet,” wrote analysts at Wedbush, who have the equivalent of a hold rating on the stock. That recommendation is “based on SIVB’s growth normalizing after an exceptional 2020-2021 and our belief that the VC market could remain challenged for the next couple quarters.”
Moody’s downgrade specifically pointed to concerns about the bank’s risk profile, pointing out that the “balance of shareholder and creditor interests posed higher than average governance challenges.”
SVB still managed to find reasons for optimism. In a section of its report titled “Continued underlying momentum,” the bank noted that private equity and venture capital dry powder hit a record high in January to the tune of $2.6 trillion, an indication that there’s plenty of cash out there for startups.
SVB can only hope that it remains a trusted financial source for companies as they look to eventually store a good chunk of that money.
WATCH: Why SVB isn’t a canary in the coal mine for regional banks
Omar Marques | Sopa Images | Lightrocket | Getty Images
EToro, a stock brokerage platform that’s been ramping up in crypto, has priced its IPO at $52 a share, as the company prepares to test the market’s appetite for new offerings.
The Israel-based company raised nearly $310 million, selling nearly 6 million shares in a deal that values the business at about $4.2 billion. The company had planned to sell shares at $46 to $50 each. Another almost 6 million shares are being sold by existing investors.
IPOs looked poised for a rebound when President Donald Trump returned to the White House in January after a prolonged drought spurred by rising interest rates and inflationary concerns. CoreWeave’s March debut was a welcome sign for IPO hopefuls such as eToro, online lender Klarna and ticket reseller StubHub.
But tariff uncertainty temporarily stalled those plans. The retail trading platform filed for an initial public offering in March, but shelved plans as rising tariff uncertainty rattled markets. Klarna and StubHub did the same.
EToro’s Nasdaq debut, under ticker symbol ETOR, may indicate whether the public market is ready to take on risk. Digital physical therapy company Hinge Health has started its IPO roadshow, and said in a filing on Tuesday that it plans to raise up to $437 million in its upcoming offering. Also on Tuesday, fintech company Chime filed its prospectus with the SEC.
Another trading app, Webull, merged with a special-purpose acquisition company in April.
Founded in 2007 by brothers Yoni and Ronen Assia along with David Ring, eToro competes with the likes of Robinhood and makes money through fees related to trading, including spreads on buy and sell orders, and non-trading activities such as withdrawals and currency conversion.
Net income jumped almost thirteenfold last year to $192.4 million from $15.3 million a year earlier. The company has been ramping up its crypto business, with revenue from cryptoassets more than tripling to over $12 million in 2024. One-quarter of its net trading contribution last year came from crypto, up from 10% the prior year.
This isn’t eToro’s first attempt at going public. In 2022, the company scrapped plans to hit the market through a merger with a special purpose acquisition company (SPAC) during a sharp downturn in equity markets. The deal would have valued the company at more than $10 billion.
CEO Yoni Assia told CNBC early last year that eToro was still aiming for a market debut but “evaluating the right opportunity” as it was building relationships with exchanges, including the Nasdaq.
“We definitely are eyeing the public markets,” he said at the time. “I definitely see us becoming eventually a public company.”
EToro said in its prospectus that BlackRock had expressed interest in buying $100 million in shares at the IPO price. The company said it planned to sell 5 million shares in the offering, with existing investors and executives selling another 5 million.
Underwriters for the deal include Goldman Sachs, Jefferies and UBS.
— CNBC’s Ryan Browne and Jordan Novet contributed reporting
WATCH: Venture capital firm founder on the Gulf’s next wave of unicorns
Klay Thompson #31 of the Dallas Mavericks handles the ball during the game against the Memphis Grizzlies during the 2025 SoFi Play-In Tournament on April 18, 2025 at FedExForum in Memphis, Tennessee.
Joe Murphy | National Basketball Association | Getty Images
Chime Financial paid the NBA’s Dallas Mavericks roughly $33 million over three years to have its logo worn as a patch on player jerseys, the company disclosed in its IPO filing Tuesday.
The Mavericks finalized the jersey deal, along with “certain other sponsorship and promotional rights,” in 2020, but terms weren’t announced. CNBC reported at the time that, citing an NBA official, that the league’s patch sponsorships ranged from $2 million to $20 million per season, depending on market size.
Chime, a San Francisco-based fintech company that provides online banking services like direct deposit and credit cards, plans to soon debut on the Nasdaq. Cynthia Marshall, who was CEO for the Mavericks from 2018 until December of last year, is on Chime’s board, so the company included details of the arrangement in the related party transactions section of its filing.
The company said it paid the Mavericks $10.5 million in 2022, $11.5 million in 2023 and $11.2 million last year.
Marshall told CNBC in 2020 that the decision to select Chime for its jersey patch came as the team was looking to fill its official sponsorship slot, which came with the deal. The logo has been displayed around American Airlines Center, where the Mavericks play their home games.
“We wanted somebody that was doing well as a business and growing,” Marshall said. “It’s a perfect fit.”
Chime’s IPO filing lands a day after the Mavericks shocked the NBA world by winning the draft lottery and the right to draft presumed top pick Cooper Flagg from Duke University. The Mavericks had only a 1.8% chance of landing the top pick based on where they finished in the standings. ESPN reported on Wednesday that the Mavericks plan to draft Flagg and are not considering the possibility of trading him.
It was a remarkably fortuitous turn of events for a front office and ownership team that’s been roundly criticized for months since trading franchise cornerstone Luka Doncic in February, bringing back older star Anthony Davis in return.
Longtime owner Mark Cuban sold a majority stake in the Mavericks in 2023 to casino owner Miriam Adelson and her family.
In October, the Mavericks announced a multi-year extension to its Chime deal, agreeing to showcase the brand and the company’s products more broadly. One new aspect was the creation of Chime Lane, “a dedicated entrance featuring exclusive benefits for Chime members during Mavs games and select events at AAC,” the team said in a press release.
— CNBC’s Jordan Novet contributed to this report.
A sign that reads “Epic Intergalactic Headquarters” on campus.
Epic Systems
CureIS Healthcare, a managed care services company, filed a civil lawsuit against Epic Systems on Monday night, alleging the electronic health record, or EHR, giant has carried out a “multi-prong scheme to destroy” CureIS’ business.
CureIS offers technology and managed services for government programs, including Medicare, Medicaid and other state health initiatives. In a 40-page complaint that was made public on Tuesday, CureIS claims Epic has interfered with its customer relationships, blocked access to necessary data and raised unfounded security concerns, among other anticompetitive practices.
Epic, the leader in the EHR market, did not immediately respond to CNBC’s request for comment.
The lawsuit is the latest legal battle facing Epic, which houses medical records for about 280 million patients in the U.S. and offers other health-care tools. Data startup Particle Health filed an antitrust lawsuit against the company in September, alleging Epic has used its dominance in the EHR space to stifle competition in other markets that use that data.
“Particle’s claims are baseless,” Epic told CNBC in a statement at the time.
CureIS’ suit was filed in the U.S. District Court for the Northern District of California. The company is being represented by Quinn Emanuel Urquhart & Sullivan, LLP, the same firm that is representing Particle.
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