Venture capital firms on both sides of the Atlantic have been urging their portfolio companies to move money out of embattled lender Silicon Valley Bank, deepening fears of a run on the tech-focused bank.
Silicon Valley Bank shares plunged 60% Thursday after disclosing that it needed to shore up its capital with a $2.25 billion equity raise from investors including General Atlantic. The company’s stock was down another 60% in premarket trading Friday.
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SVB is a major bank in the technology startup space, having developed relationships with the VC community over its four decade existence. Providing traditional banking services while also funding tech projects, it is considered a backbone of the venture capital industry in the U.S.
Numerous VC funds, including major players like Founders Fund, Union Square Ventures and Coatue Management, have advised companies in their portfolios to move their funds out of SVB to avoid the risk of being caught up in the potential failure of the bank. Having funds frozen at SVB could be deadly for a money-burning startup, according to founders with accounts at the bank who spoke to CNBC on the condition of anonymity.
Pear VC, an early-stage VC firm based in San Francisco, urged its portfolio network to withdraw funds from SVB on Thursday. Pear’s portfolio includes the open-source database Edge DB and payroll management platform Gusto.
“In light of the situation with Silicon Valley Bank that we are sure all of you are watching unfold, we wanted to reach out and recommend that you move any cash deposits you may have with SVB to another banking platform,” said Anna Nitschke, Pear’s chief financial officer, in an email to founders obtained by CNBC.
“In this market, a larger money center bank (think Citi Bank, JP Morgan Chase, Bank of America) is best suited, but in the interest of time, you might be able to open interim accounts faster with smaller banking platforms such as PacWest, Mercury, or First Republic Bank.”
Pear was not immediately available to comment when contacted by CNBC.
SVB didn’t immediately respond when asked by CNBC whether it had enough assets on hand to process withdrawals from startups.
The wind-down of crypto-centric Silvergate Bank and pressure on Silicon Valley Bank this week reminded some founders of the 2008 financial crisis, in which banks toppled during the mortgage bust.
SVB is grappling with a difficult technology funding environment as the IPO market remains chilly and VCs remain cautious against the backdrop of a weaker macroeconomic situation and rising interest rates.
In the tech heydays of 2020 and 2021, ultra low interest rates meant that it was much easier for startups to raise capital.
As rates have risen, company valuations have seen something of a reset, and venture-backed firms are feeling the pinch as VC funding market experiences a slowdown. Even with funding rounds slowing, startups have had to keep burning through cash raised from earlier rounds to cover their overheads.
That’s bad news for SVB, as it means companies have had to drain deposits from the bank at a time when it is losing money on excess cash invested in U.S. debt securities, which have now fallen in price after the Fed’s rate hikes.
Hoxton Ventures, a London-based VC firm, is advising founders to withdraw two months’ worth of “burn,” or venture capital they would use to finance overhead, from SVB.
In a note to founders Thursday, Hussein Kanji, Hoxton’s founder partner, said: “We have seen some funds passing on a view that they remain confident in SVB. We are seeing other funds encouraging companies to withdraw their funds from SVB. It remains to be seen how this will all play out.
“If the self-fulfilling prophecy occurs, the risks to you are asymmetric.”
Speaking separately to CNBC, Kanji said: “The big danger for startups is that their accounts will be frozen while the mess is being sorted.”
Kanji believes SVB may either be bailed out by the U.S. Federal Reserve or acquired by another firm.
White House Senior Advisor Elon Musk walks to the White House after landing in Marine One on the South Lawn with U.S. President Donald Trump (not pictured) on March 9, 2025 in Washington, DC.
Samuel Corum | Getty Images News | Getty Images
Tesla shares fell in premarket trade on Monday after CEO Elon Musk announced plans to form a new political party.
The stock was down 7.13% by 4:27 a.m. E.T.
Musk said over the weekend that the party would be called the “America Party” and could focus “on just 2 or 3 Senate seats and 8 to 10 House districts.” He suggested this would be “enough to serve as the deciding vote on contentious laws, ensuring that they serve the true will of the people.”
Now tech billionaire’s reinvolvement in the political arena is making investors nervous.
“Very simply Musk diving deeper into politics and now trying to take on the Beltway establishment is exactly the opposite direction that Tesla investors/shareholders want him to take during this crucial period for the Tesla story,” Dan Ives, global head of technology research at Wedbush Securities, said in a note on Sunday.
“While the core Musk supporters will back Musk at every turn no matter what, there is broader sense of exhaustion from many Tesla investors that Musk keeps heading down the political track.”
Musk’s previous political foray earned him Trump’s praise in the early days, but he has since drawn the ire of the U.S. president.
The two have clashed over various areas of policy, including Trump’s spending bill which Musk has said would increase America’s debt burden. Musk has taken issue to particular cuts to tax credits and support for solar and wind energy and electric vehicles.
Trump on Sunday called Musk’s move to form a political party “ridiculous,” adding that the Tesla boss had gone “completely off the rails.”
Musk is contending with more than just political turmoil. Tesla reported a 14% year-on-year decline in car deliveries in the second quarter, missing expectations. The company is facing rising competition, especially in its key market, China.
Jonathan Ross, chief executive officer of Groq Inc., during the GenAI Summit in San Francisco, California, US, on Thursday, May 30, 2024.
David Paul | Bloomberg | Getty Images
Artificial intelligence semiconductor startup Groq announced Monday it has established its first data center in Europe as it steps up its international expansion.
Groq, which is backed by investment arms of Samsung and Cisco, said the data center will be located in Helsinki, Finland and is in partnership with Equinix.
Groq is looking to take advantage of rising demand for AI services in Europe following other U.S. firms which have also ramped up investment in the region. The Nordics in particular is a popular location for the data facilities as the region has easy access to renewable energy and cooler climates. Last month, Nvidia CEO Jensen Huang was in Europe and signed several infrastructure deals, including data centers.
Groq, which is valued at $2.8 billion, designs a chip that the company calls a language processing unit (LPU). It is designed for inferencing rather training. Inferencing is when a pre-trained AI model interprets live data to come up with a result, much like the answers that are produced by popular chatbots.
While Nvidia has a stranglehold on the chips required for training huge AI models with its graphics processing units (GPUs), there is a swathe of startups hoping to take a slice of the pie when it comes to inferencing. SambaNova; Ampere, a company SoftBank is in the process of purchasing; Cerebras and Fractile, are all looking to join the AI inference race.
European politicians have been pushing the notion of sovereign AI — where data centers must be located in the region. Data centers that are located closer to users also help improve the speed of services.
Global data center builder Equinix connects different cloud providers together, such as Amazon Web Services and Google Cloud, making it easier for businesses to have multiple vendors. Groq’s LPUs will be installed inside the Equinix data center allowing businesses to access Groq’s inference capabilities via Equinix.
Groq currently has data centers in the U.S. and Canada and Saudi Arabia with its technology.
Don’t miss Groq CEO Jonathan Ross on Squawk Box Europe at 7:45 a.m. London time.
Hidden among the majestic canyons of the Utah desert, about 7 miles from the nearest town, is a small research facility meant to prepare humans for life on Mars.
The Mars Society, a nonprofit organization that runs the Mars Desert Research Station, or MDRS, invited CNBC to shadow one of its analog crews on a recent mission.
“MDRS is the best analog astronaut environment,” said Urban Koi, who served as health and safety officer for Crew 315. “The terrain is extremely similar to the Mars terrain and the protocols, research, science and engineering that occurs here is very similar to what we would do if we were to travel to Mars.”
SpaceX CEO and Mars advocate Elon Musk has said his company can get humans to Mars as early as 2029.
The 5-person Crew 315 spent two weeks living at the research station following the same procedures that they would on Mars.
David Laude, who served as the crew’s commander, described a typical day.
“So we all gather around by 7 a.m. around a common table in the upper deck and we have breakfast,” he said. “Around 8:00 we have our first meeting of the day where we plan out the day. And then in the morning, we usually have an EVA of two or three people and usually another one in the afternoon.”
An EVA refers to extravehicular activity. In NASA speak, EVAs refer to spacewalks, when astronauts leave the pressurized space station and must wear spacesuits to survive in space.
“I think the most challenging thing about these analog missions is just getting into a rhythm. … Although here the risk is lower, on Mars performing those daily tasks are what keeps us alive,” said Michael Andrews, the engineer for Crew 315.
