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.”
OpenAI CEO Sam Altman visits “Making Money With Charles Payne” at Fox Business Network Studios in New York on Dec. 4, 2024.
Mike Coppola | Getty Images
OpenAI CEO Sam Altman’s sister, Ann Altman, filed a lawsuit on Monday, alleging that her brother sexually abused her regularly between the years of 1997 and 2006.
The lawsuit, which was filed in U.S. District Court in the Eastern District of Missouri, alleges that the abuse took place at the family’s home in Clayton, Missouri, and began when Ann, who goes by Annie, was three and Sam was 12. The filing claims that the abusive activities took place “several times per week,” beginning with oral sex and later involving penetration.
The lawsuit claims that “as a direct and proximate result of the foregoing acts of sexual assault,” the plaintiff has experienced “severe emotional distress, mental anguish, and depression, which is expected to continue into the future.”
The younger Altman has publicly made similar sexual assault allegations against her brother in the past on platforms like X, but this is the first time she’s taken him to court. She’s being represented by Ryan Mahoney, whose Illinois-based firm specializes in matters including sexual assault and harassment.
The lawsuit requests a jury trial and damages in excess of $75,000.
In a joint statement on X with his mother, Connie, and his brothers Jack and Max, Sam Altman denied the allegations.
“Annie has made deeply hurtful and entirely untrue claims about our family, and especially Sam,” the statement said. “We’ve chosen not to respond publicly, out of respect for her privacy and our own. However, she has now taken legal action against Sam, and we feel we have no choice but to address this.”
Their response says “all of these claims are utterly untrue,” adding that “this situation causes immense pain to our entire family.” They said that Ann Altman faces “mental health challenges” and “refuses conventional treatment and lashes out at family members who are genuinely trying to help.”
Sam Altman has gained international prominence since OpenAI’s debut of the artificial intelligence chatbot ChatGPT in November 2022. Backed by Microsoft, the company was most recently valued at $157 billion, with funding coming from Thrive Capital, chipmaker Nvidia, SoftBank and others.
Altman was briefly ousted from the CEO role by OpenAI’s board in November 2023, but was quickly reinstated due to pressure from investors and employees.
This isn’t the only lawsuit the tech exec faces.
In March, Tesla and SpaceX CEO Elon Musk sued OpenAI and co-founders Altman and Greg Brockman, alleging breach of contract and fiduciary duty. Musk, who now runs a competing AI startup, xAI, was a co-founder of OpenAI when it began as a nonprofit in 2015. Musk left the board in 2018 and has publicly criticized OpenAI for allegedly abandoning its original mission.
Musk is suing to keep OpenAI from turning into a for-profit company. In June, Musk withdrew the original complaint filed in a San Francisco state court and later refiled in federal court.
Last month, OpenAI clapped back against Musk, claiming in a blog post that in 2017 Musk “not only wanted, but actually created, a for-profit” to serve as the company’s proposed new structure.
Technology
Meta employees criticize Zuckerberg decisions to end fact-checking, add Dana White to board
This photo illustration created on January 7, 2025, in Washington, DC, shows an image of Mark Zuckerberg, CEO of Meta, and an image of the Meta logo.
Drew Angerer | Afp | Getty Images
Meta employees took to their internal forum on Tuesday, criticizing the company’s decision to end third-party fact-checking on its services two weeks before President-elect Donald Trump’s inauguration.
Company employees voiced their concern after Joel Kaplan, Meta’s new chief global affairs officer and former White House deputy chief of staff under former President George W. Bush, announced the content policy changes on Workplace, the in-house communications tool.
“We’re optimistic that these changes help us return to that fundamental commitment to free expression,” Kaplan wrote in the post, which was reviewed by CNBC.
The content policy announcement follows a string of decisions that appear targeted to appease the incoming administration. On Monday, Meta added new members to its board, including UFC CEO Dana White, a longtime friend of Trump, and the company confirmed last month that it was contributing $1 million to Trump’s inauguration.
Among the latest changes, Kaplan announced that Meta will scrap its fact-checking program and shift to a user-generated system like X’s Community Notes. Kaplan, who took over his new role last week, also said that Meta will lift restrictions on certain topics and focus its enforcement on illegal and high-severity violations while giving users “a more personalized approach to political content.”
One worker wrote they were “extremely concerned” about the decision, saying it appears Meta is “sending a bigger, stronger message to people that facts no longer matter, and conflating that with a victory for free speech.”
Another employee commented that by “simply absolving ourselves from the duty to at least try to create a safe and respective platform is a really sad direction to take.” Other comments expressed concern about the impact the policy change could have on the discourse around topics like immigration, gender identity and gender, which, according to one employee, could result in an “influx of racist and transphobic content.”
A separate employee said they were scared that “we’re entering into really dangerous territory by paving the way for the further spread of misinformation.”
The changes weren’t universally criticized, as some Meta workers congratulated the company’s decision to end third-party fact checking. One wrote that X’s Community Notes feature has “proven to be a much better representation of the ground truth.”
Another employee commented that the company should “provide an accounting of the worst outcomes of the early years” that necessitated the creation of a third-party fact-checking program and whether the new policies would prevent the same type of fall out from happening again.
As part of the company’s massive layoffs in 2023, Meta also scrapped an internal fact-checking project, CNBC reported. That project would have let third-party fact checkers like the Associated Press and Reuters, in addition to credible experts, comment on flagged articles in order to verify the content.
Although Meta announced the end of its fact-checking program on Tuesday, the company had already been pulling it back. In September, a spokesperson for the AP told CNBC that the news agency’s “fact-checking agreement with Meta ended back in January” 2024.
Dana White, CEO of the Ultimate Fighting Championship gestures as he speaks during a rally for Republican presidential nominee and former U.S. President Donald Trump at Madison Square Garden, in New York, U.S., Oct. 27, 2024.
Andrew Kelly | Reuters
After the announcement of White’s addition to the board on Monday, employees also posted criticism, questions and jokes on Workplace, according to posts reviewed by CNBC.
White, who has led UFC since 2001, became embroiled in controversy in 2023 after a video published by TMZ showed him slapping his wife at a New Year’s Eve party in Mexico. White issued a public apology, and his wife, Anne White, issued a statement to TMZ, calling it an isolated incident.
Commenters on Workplace made jokes asking whether performance reviews would now involve mixed martial arts style fights.
In addition to White, John Elkann, the CEO of Italian auto holding company Exor, was named to Meta’s board.
Some employees asked what value autos and entertainment executives could bring to Meta, and whether White’s addition reflects the company’s values. One post suggested the new board appointments would help with political alliances that could be valuable but could also change the company culture in unintended or unwanted ways.
Comments in Workplace alluding to White’s personal history were flagged and removed from the discussion, according to posts from the internal app read by CNBC.
An employee who said he was with Meta’s Internal Community Relations team, posted a reminder to Workplace about the company’s “community engagement expectations” policy, or CEE, for using the platform.
“Multiple comments have been flagged by the community for review,” the employee posted. “It’s important that we maintain a respectful work environment where people can do their best work.”
The internal community relations team member added that “insulting, criticizing, or antagonizing our colleagues or Board members is not aligned with the CEE.”
Several workers responded to that note saying that even respectful posts, if critical, had been removed, amounting to a corporate form of censorship.
One worker said that because critical comments were being removed, the person wanted to voice support for “women and all voices.”
Meta declined to comment.
— CNBC’s Salvador Rodriguez contributed to this report.
WATCH: Meta adds Dana White, John Elkann, and Charlie Songhurst to board of directors.
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