Silicon Valley investors and founders express shock, describe struggles to get money out of SVB
Nikolas Kokovlis | Nurphoto | Getty Images
Venture capitalists and technology executives are scrambling to make sense and account for the potential repercussions of the sudden implosion of Silicon Valley Bank on Friday.
The Federal Deposit Insurance Corp. said Friday that U.S. federal regulators shut down Silicon Valley Bank, the premiere financial institution for Silicon Valley tech startups for the past 40 years. The collapse of SVB represents the biggest banking failure since the 2008 global economic crises.
Numerous venture investors and technology executives expressed shock to CNBC, some comparing SVB’s current debacle to the Lehman Brothers, which filed for bankruptcy in 2008. Many of the investors and execs requested anonymity discussing matters that might affect their firms and employees.
General sentiment is that SVB did a poor job communicating to clients when it announced earlier this week that it would be raising $500 million from venture firm General Atlantic while also unloading holdings worth roughly $21 billion at a loss of $1.8 billion. One VC said the fact for SVB to announce that it’s raising money while at the same time essentially saying that everything is “fine,” seemed to trigger people’s memories of Lehman Brothers, who they remember acted similarly at the time.
“So unfortunately, they repeated mistakes in history and anyone who lived through that period said, ‘Hey, maybe they’re not fine; we were told that last time,'” the VC said.
SVB attempted to quell any fears that it was financially unsound as late as Thursday evening.
In one email that SVB sent to a customer, a copy of which CNBC obtained, the bank characterized the rumors about its problems as “buzz about SVB in the markets” and attempted to reassure the customer that it “launched a series of strategic actions to strengthen our financial position, enhance profitability and improve financial flexibility now and in the future.”
“It is business as usual at SVB,” the bank said in the email to startups. It added toward the end of the email, “Moreover, we have a 40 year history navigating bear and bull markets and have developed leading risk mitigation capabilities to ensure our long term financial health.”
Another venture capitalist said that a representative from Silicon Valley Bank called their firm on Thursday to assuage their fears, but that the firm’s CFO “didn’t feel that it was reassuring, to say the least.”
However, one tech CEO was sympathetic to the bank’s plight, asking, “What message would ever reassure you that your money is safe when other people are telling you that there’s a fraud happening? There’s no message because it’s not a messaging thing. It’s the prisoner’s dilemma thing is everybody at that moment now has to try and imagine what everybody else is going to do.”
When asked for comment, a representative from SVB referred CNBC back to the FDIC announcement. “The FDIC will share additional information when it is available.”
‘A Twitter-led bank run’
Several venture capitalists quickly told their portfolio companies to move money out of Silicon Valley Bank to other banks, including Merrill Lynch, First Republic, and JP Morgan, so they could pay their employees on time next week.
One AI startup executive noted that the company’s chief financial officer was quick to handle the situation, and it had enough money to pay employees on time. Still, the collapse of SVB left a poor taste in the executive’s mouth, who said that the bank’s collapse feels like “unnecessary hysteria.”
“It makes me disappointed in our ecosystem,” the startup CEO said.
Many venture capitalists echoed the startup CEO’s sentiment that the SVB collapse felt like a self-fulfilling prophecy created by unnecessary panic. Some likened it to a “Twitter-led bank run,” as the tech community took to social media to spread information, and, often, panic. One prominent technology CEO told CNBC that numerous startup founders were using Twitter and Meta’s communication service WhatsApp to send each other rapid-fire updates.
One venture capitalist said it was as if someone screamed “fire in a crowded theater where there is no fire.”
“And then when everyone rushes to the door, they knock over the oil lamp and there is a fire and it burns down the building,” the venture capitalist said. “And then that same person standing outside being like, ‘see I told you so.'”
‘Everyone is scrambling’
As the panic spread and the FDIC stepped in, companies with funds locked up were reporting problems getting cash out and making payroll.
One startup founder told CNBC that “everyone is scrambling.” He said he has talked to more than 30 other founders, and that both big and small companies are being impacted.
The founder added that a CFO from a unicorn startup has tried to move more than $45 million out of SVB to no avail. Another company with 250 employees told the founder that SVB has “all our cash.”
Another founder said her company’s payroll provider moved from SVB to another bank on Thursday, which meant payroll did not run for employees as planned Friday morning. She said she has been over-communicating with employees to alleviate their concerns as much as possible, and she is expecting payroll to hit by the end of the day Friday.
In the case that it doesn’t, the company is planning to wire employees who need immediate spot coverage the funds directly, according to an internal memo viewed by CNBC.
“A lot of people live down to the dollar in terms of budgeting, and they cannot afford 24 hour delay in their payroll,” the founder said.
Jean Yang, the founder and CEO of monitoring company Akita, attempted to perform a wire transfer to ensure she could make payroll for her seven-person team, then drove to the SVB location on Sand Hill Road in Menlo Park, a street populated by venture-capital offices.
There, she asked a teller for a bank transfer and was told the branch couldn’t do it. So she asked for a cashier’s check for $1 million. After 20 or 25 minutes the bank handed it over.
Others in line were taking out their entire balance. “I regret not taking out our entire balance now,” she said.
On Frida, Yang returned to the Silicon Valley Bank branch 15 minutes before it opened to remove the remaining money. A line of about 40 people had formed. Gossip spread among those waiting. One person showed a tweet on their phone suggesting that bank employees had been instructed not to come to work.
Then an employee came out of the office and offered about 15 copies of an article from the Federal Deposit Insurance Corporation on the agency’s response to the bank’s situation. The line disbanded as people realized the bank’s fate.
Later on Friday one of the startup’s investors called Yang and offered to help Akita make payroll, she said.”My hope is that the government bails out people past $250,000,” she said. “I know people with tens of millions, hundreds of millions with SVB. I think if they only get $250,000, their companies are going to be wiped out.”
“Now, everyone’s waiting to see when the Treasury will step in,” said another venture investor. “Hopefully [California Governor] Gavin Newsom is calling Biden right now and saying, ‘This is systemic in our area, but you can see the ripple effects on other banks and their equities and their bonds.’ If it’s systemic, I think the Treasury will step in like 2007 and ’08 and protect the money market accounts, plus will protect the depositor.”
This person added, “If they don’t step in, then people will presume that money’s lost. That’s going to have huge ramifications on the business environment.”
JoeBen Bevirt, founder and CEO of Joby Aviation, stands near an electric air taxi by Joby Aviation at the Downtown Manhattan Heliport in Manhattan, New York City, U.S., November 12, 2023.
Roselle Chen | Reuters
Joby Aviation is ramping up its manufacturing capabilities in the U.S. as it races to roll out air taxi service in 2026.
The electric vertical takeoff and landing (eVTOL) maker said Tuesday that it’s launching production at its remodeled components facility in Dayton, Ohio, and plans to double capacity at its Marina, California, manufacturing hub.
“Reimagining urban mobility takes speed, scale, and precision manufacturing. Our expanded manufacturing footprint in both California and Ohio is preparing us to do just that,” said product chief Eric Allison in a release.
Shares jumped more than 7%, building on a 16% year-to-date gain.
Joby Aviation and competitors such as Archer Aviation and Eve Air Mobility are aiming to roll out eVTOLs worldwide that can ease traffic congestion in crowded city centers, but they are awaiting regulatory approval.
The company is currently in the process of gaining Federal Aviation Administration approval for its vehicles.
Last month, Joby Aviation shares popped on news that it delivered its first eVTOL to the United Arab Emirates, with plans to launch service in the region next year. The company agreed to an exclusive six-year deal to roll out air taxi service in Dubai last February.
Joby said the new facilities will create hundreds of new full-time jobs and underscore its commitment to fostering American innovation. At full capacity, the 435,500-square-foot California factory will manufacture as many as 24 aircraft annually.
The electric air transport company also said the opening coincided with the flight of its sixth aircraft.
Engineers from Toyota will help ramp up aircraft production to 500 annually at the Ohio facility. The companies inked a $500 million deal last year.
Shares of Joby and its competitors have ballooned in value this year as interest in the technology gains steam.
In June, President Donald Trump signed an executive order that included the creation of an air taxi testing program.
WATCH: Joby Aviation CEO on UAE delivery: This is a huge milestone for us
Howard Lutnick, U.S. Secretary of Commerce speaks during the Pennsylvania Energy And Innovation Summit 2025 at Carnegie Mellon University in Pittsburgh on July 15, 2025.
David A. Grogan | CNBC
Commerce Secretary Howard Lutnick on Tuesday said the Trump administration reversed course on allowing Nvidia to sell its AI chips to China because the U.S. company will not be giving over its best technology.
Lutnick made the remark speaking with CNBC’s Brian Sullivan, saying that Nvidia wants to sell China its “4th best” chip, which is slower than the fastest chips that U.S. companies use.
“We don’t sell them our best stuff, not our second best stuff, not even our third best,” Lutnick said.
Nvidia said Monday night that it would soon resume sales of the H20 chip to China after the Trump administration signaled that it would grant the chipmaker necessary export licenses.
Lutnick said that the administration said that the renewed sale of H20 chips to China was linked to a rare-earths magnet deal. Lutnick said it was in U.S. interests to have Chinese companies using American technology so they continue to use an American “tech stack.”
“The fourth one down, we want to keep China using it,” Lutnick said. “We want to keep having the Chinese use the American technology stack, because they still rely upon it.”
Similarly, Nvidia CEO Jensen Huang has said in recent weeks that the U.S. should continue selling his chips to China so Chinese companies don’t invest in homegrown infrastructure. Huang on Sunday also said that the Chinese military wouldn’t use Nvidia chips anyway, and previously signaled that China’s Huawei is a legitimate competitor.
“The idea is the Chinese are more than capable of building their own,” Lutnick said. “You want to keep one step ahead of what they can build, so they keep buying our chips.”
The reversal is a major win for Nvidia. Huang had previously said that the Trump administration’s decision to require a license for the H20 chip in April “effectively closed” the China market. Nvidia said that it could have sold $8 billion in H20 chips in the current quarter before sales were stopped.
The administration reversed its decision after President Donald Trump met with Huang in Washington last week.
“You want to sell the Chinese enough that their developers get addicted to the American technology stack,” Lutnick said. “That’s the thinking.”
The H20 chip was introduced in 2022 in response to Biden administration export controls. It’s based on the same underlying technology as Nvidia’s Hopper-generation chips, which are sold in the U.S. as finished systems using H100 or H200 chips.
The U.S. chipmaker took some features out of the H20 in order to sell it to China, including fewer graphics processing unit cores and lower bandwidth connecting separate parts of the chip. But the success of the DeepSeek R1 model suggested that there were many Chinese companies that were just fine with the slowed-down chips. The China-specific H20 is behind Nvidia’s Blackwell chips, the H100 and the H200, Lutnick said.
Nvidia says that it releases new artificial intelligence chips every year and that serious AI developers should always try to get the latest and greatest versions because the technology is improving so quickly.
The best AI chips broadly available from clouds and system makers today are called Blackwell, and come as a GB200 chip with a paired central processing unit as well as B100 and B200 versions. Nvidia also makes a range of Blackwell-based chips for gaming and graphics that can be used for AI, but they’re generally weaker than the biggest chips designed for data centers.
A successor, called Blackwell Ultra, is only now starting to be installed in data centers, and it’s expected to ramp in volume over the next year. In 2027, Nvidia will release “Vera Rubin” chips.
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