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.”
The logo for the Food and Drug Administration is seen ahead of a news conference on removing synthetic dyes from America’s food supply, at the Health and Human Services Headquarters in Washington, DC on April 22, 2025.
Nathan Posner | Anadolu | Getty Images
The U.S. Food and Drug Administration on Tuesday published a warning letter addressed to the wrist wearable company Whoop, alleging it is marketing a new blood pressure feature without proper approvals.
The letter centers around Whoop’s Blood Pressure Insights (BPI) feature, which the company introduced alongside its latest hardware launch in May.
Whoop said its BPI feature uses blood pressure information to offer performance and wellness insights that inform consumers and improve athletic performance.
But the FDA said Tuesday that Whoop’s BPI feature is intended to diagnose, cure, treat or prevent disease — a key distinction that would reclassify the wellness tracker as a “medical device” that has to undergo a rigorous testing and approval processes.
“Providing blood pressure estimation is not a low-risk function,” the FDA said in the letter. “An erroneously low or high blood pressure reading can have significant consequences for the user.”
A Whoop spokesperson said the company’s system offers only a single daily estimated range and midpoint, which distinguishes it from medical blood pressure devices used for diagnosis or management of high blood pressure.
Whoop users who purchase the $359 “Whoop Life” subscription tier can use the BPI feature to get daily insights about their blood pressure, including estimated systolic and diastolic ranges, according to the company.
Whoop also requires users to log three traditional cuff-readings to act as a baseline in order to unlock the BPI feature.
Additionally, the spokesperson said the BPI data is not unlike other wellness metrics that the company deals with. Just as heart rate variability and respiratory rate can have medical uses, the spokesperson said, they are permitted in a wellness context too.
“We believe the agency is overstepping its authority in this case by attempting to regulate a non-medical wellness feature as a medical device,” the Whoop spokesperson said.
High blood pressure, also called hypertension, is the number one risk factor for heart attacks, strokes and other types of cardiovascular disease, according to Dr. Ian Kronish, an internist and co-director of Columbia University’s Hypertension Center.
Kronish told CNBC that wearables like Whoop are a big emerging topic of conversation among hypertension experts, in part because there’s “concern that these devices are not yet proven to be accurate.”
If patients don’t get accurate blood pressure readings, they can’t make informed decisions about the care they need.
At the same time, Kronish said wearables like Whoop present a “big opportunity” for patients to take more control over their health, and that many professionals are excited to work with these tools.
Understandably, it can be confusing for consumers to navigate. Kronish encouraged patients to talk with their doctor about how they should use wearables like Whoop.
“It’s really great to hear that the FDA is getting more involved around informing consumers,” Kronish said.
FILE PHOTO: The headquarters of the U.S. Food and Drug Administration (FDA) is seen in Silver Spring, Maryland November 4, 2009.
Jason Reed | Reuters
Whoop is not the only wearable manufacturer that’s exploring blood pressure monitoring.
Omron and Garmin both offer medical blood pressure monitoring with on-demand readings that fall under FDA regulation. Samsung also offers blood-pressure-reading technology, but it is not available in the U.S. market.
Apple has also been teasing a blood pressure sensor for its watches, but has not been able to deliver. In 2024, the tech giant received FDA approval for its sleep apnea detection feature.
Whoop has previously received FDA clearance for its ECG feature, which is used to record and analyze a heart’s electrical activity to detect potential irregularities in rhythm. But when it comes to blood pressure, Whoop believes the FDA’s perspective is antiquated.
“We do not believe blood pressure should be considered any more or less sensitive than other physiological metrics like heart rate and respiratory rate,” a spokesperson said. “It appears that the FDA’s concerns may stem from outdated assumptions about blood pressure being strictly a clinical domain and inherently associated with a medical diagnosis.”
The FDA said Whoop could be subject to regulatory actions like seizure, injunction, and civil money penalties if it fails to address the violations that the agency identified in its letter.
Whoop has 15 business days to respond with steps the company has taken to address the violations, as well as how it will prevent similar issues from happening again.
“Even accounting for BPI’s disclaimers, they do not change this conclusion, because they are insufficient to outweigh the fact that the product is, by design, intended to provide a blood pressure estimation that is inherently associated with the diagnosis of a disease or condition,” the FDA said.
WATCH: Watch CNBC’s full interview with FDA commissioner Dr. Marty Makary
United Launch Alliance Atlas V rocket carrying the first two demonstration satellites for Amazon’s Project Kuiper broadband internet constellation stands ready for launch on pad 41 at Cape Canaveral Space Force Station on October 5, 2023 in Cape Canaveral, Florida, United States.
Paul Hennessey | Anadolu Agency | Getty Images
As Amazon chases SpaceX in the internet satellite market, the e-commerce and computing giant is now counting on Elon Musk’s rival company to get its next batch of devices into space.
On Wednesday, weather permitting, 24 Kuiper satellites will hitch a ride on one of SpaceX’s Falcon 9 rockets from a launchpad on Florida’s Space Coast. A 27-minute launch window for the mission, dubbed “KF-01,” opens at 2:18 a.m. ET.
The launch will be livestreamed on X, the social media platform also owned by Musk.
The mission marks an unusual alliance. SpaceX’s Starlink is currently the dominant provider of low earth orbit satellite internet, with a constellation of roughly 8,000 satellites and about 5 million customers worldwide.
Amazon launched Project Kuiper in 2019 with an aim to provide broadband internet from a constellation of more than 3,000 satellites. The company is working under a tight deadline imposed by the Federal Communications Commission that requires it to have about 1,600 satellites in orbit by the end of July 2026.
Amazon’s first two Kuiper launches came in April and June, sending 27 satellites each time aboard rockets supplied by United Launch Alliance.
Assuming Wednesday’s launch is a success, Amazon will have a total of 78 satellites in orbit. In order to meet the FCC’s tight deadline, Amazon needs to rapidly manufacture and deploy satellites, securing a hefty amount of capacity from rocket providers. Kuiper has booked up to 83 launches, including three rides with SpaceX.
Space has emerged as a battleground between Musk and Amazon founder Jeff Bezos, two of the world’s richest men. Aside from Kuiper, Bezos also competes with Musk via his rocket company Blue Origin.
Blue Origin in January sent up its massive New Glenn rocket for the first time, which is intended to rival SpaceX’s reusable Falcon 9 rockets. While Blue Origin currently trails SpaceX, Bezos last year predicted his latest venture will one day be bigger than Amazon, which he started in 1994.
Kuiper has become one of Amazon’s biggest bets, with more than $10 billion earmarked for the project. The company may need to spend as much as $23 billion to build its full constellation, analysts at Bank of America wrote in a note to clients last week. That figure doesn’t include the cost of building terminals, which consumers will use to connect to the service.
The analysts estimate Amazon is spending $150 million per launch this year, while satellite production costs are projected to total $1.1 billion by the fourth quarter.
Amazon is going after a market that’s expected to grow to at least $40 billion by 2030, the analysts wrote, citing estimates by Boston Consulting Group. The firm estimated that Amazon could generate $7.1 billion in sales from Kuiper by 2032 if it claims 30% of the market.
“With Starlink’s solid early growth, our estimates could be conservative,” the analysts wrote.
WATCH: Amazon launches first Kuiper internet satellites into space
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