Four days of panic: How startup execs navigated SVB’s meltdown and prepared for the worst
A Silicon Valley Bank worker talks with people lining up outside of the bank office on March 13, 2023 in Santa Clara, California.
Justin Sullivan | Getty Images
After turning on CNBC last Thursday to see SVB’s stock price getting hammered and news of venture firms urging startups to hit the exits, EarthOptics CEO Lars Dyrud acted quickly. At 4 p.m. ET, he requested a $25 million wire transfer from Silicon Valley Bank, representing roughly 90% of his company’s deposits.
It was too late. EarthOptics didn’t get a response on Thursday, and the following day SVB was seized by regulators in the second-largest bank failure in U.S. history. Dyrud had no idea when he’d be able to access his company’s deposits, as the Federal Deposit Insurance Corp. only guarantees $250,000 per client.
Like thousands of SVB customers, Dyrud was most immediately worried about missing payroll for March 15, which was just a few days away. He spent all day Friday and the weekend devising an emergency plan that centered around a $1 million loan from three board members, including from one investor who would be wiring funds to BambooHR, the company’s paycheck processor.
“We started planning to be without cash for nine months,” said Dyrud, in an interview Tuesday. “We had four plans in place in priority order in case something went wrong.”
Dyrud sent a Slack message to his employees late last week, updating them on the situation.
“We ultimately expect to be made whole but need to prepare for alternate access to cash while this is sorted,” Dyrud wrote in the memo, which he shared with CNBC.
SVB’s speedy collapse sent shock waves across Silicon Valley as the failure of the preeminent bank for venture-backed startups threatened to indefinitely freeze access to the money companies need to pay their staff, vendors and partners, while also destabilizing the banking system.
According to California regulators, investors and depositors withdrew $42 billion from SVB by the end of Thursday after the bank said it was selling $21 billion worth of securities at a loss and trying to raise additional capital. Dyrud feared at the time that it would be the fastest bank run the country has ever seen due to the nature of the clientele and the speed with which information travels.
On Friday afternoon, Dyrud went with his chief administrative officer and controller to a local Wells Fargo branch, in Arlington, Virginia, to open a new account. It was the only bank that would open a same-day account for his 75-person startup, whose technology is used by agricultural companies and farmers to measure the health of their soil.
That evening, Dyrud held a 45-minute board meeting over Zoom to make sure everyone was aware of the gameplan and the loan arrangement, which was structured as an unsecured promissory note. Dyrud said he was on the phone 12 hours a day, starting Thursday.
Four days of panic finally came to an end late Sunday, when regulators announced a plan to backstop deposits and ensure that all clients would be able to retrieve their money starting Monday.
By early this week, EarthOptics had its cash safely in Wells Fargo and was repaying two investors for the loans. Dyrud said he was able to call off the loan from the third investor before the money was sent.
“It was the most heavily negotiated two-day loan ever,” Dyrud said.
Refreshing Google
Otter.ai founder and CEO Sam Liang spent Monday driving to SVB branches in Silicon Valley to try and retrieve millions of dollars of his company’s money.
Liang said the company, whose software transcribes audio from meetings and interviews, tried to initiate a transfer Thursday night, but it never went through.
“We were pretty worried over the weekend, watching the news all the time,” Liang said, in an interview on Monday from the parking lot of the SVB branch in Menlo Park, California. “I checked Google like 20 times an hour, watched [Treasury Secretary Janet] Yellen talking about not bailing out Silicon Valley Bank.”
He woke up at 7 a.m. on Monday and tried logging into his account, but kept getting error messages because the system was overloaded. That’s when he got in his car.
“I figured, OK I’ll just go to an office physically,” Liang said. “I went to the Palo Alto office first. There was a line there, but a guy said they couldn’t do much. I drove from the Palo Alto office to the Menlo Park office.” At that branch, Liang said he waited between 90 minutes and two hours for help.
Liang said he’s lucky that a few months earlier Otter, which has about 100 employees, had moved the majority of its money to another bank, though he didn’t say why. Still, he said the company had a lot of money in SVB — in the millions of dollars, but less than $10 million — which would represent “a huge damage” if it disappeared.
“We need to make sure payroll and everything works,” Liang said.
He wasn’t able to get a hold of all of his money right away, though he’s confident it’s all available following the plan announced by regulators on Sunday.
Silicon Valley Bank customers listen as FDIC representatives, left, speak with them before the opening of a branch SVBs headquarters in Santa Clara, California on March 13, 2023.
Noah Berger | AFP | Getty Images
“I just got a cashier’s check,” he said. “They couldn’t give us everything so they gave us a percentage of the money. We have to do it again probably later today.”
Meanwhile, as clients plotted their next move, SVB’s newly appointed leader sent out a plea for customers to come back home.
Tim Mayopoulos, who was appointed by the FDIC as CEO of the bank, now called Silicon Valley Bridge Bank, emailed customers to tell them that SVB is open for business and ready to receive and hold deposits.
“The number one thing you can do to support the future of this institution is to help us rebuild our deposit base, both by leaving deposits with Silicon Valley Bridge Bank and transferring back deposits that left over the last several days,” Mayopoulos wrote in an email that was also posted on the company’s website.
Liang said Otter opened accounts at two larger banks over the weekend and will “distribute money over multiple banks.”
Dyrud has a similar plan. For now, all of EarthOptics’ cash is parked at Wells Fargo, but he said the company will soon spread some of it to JPMorgan Chase and one other bank.
“It just makes sense,” Dyrud said. “We wouldn’t have been in this position had we had even a second account.”
Dyrud traveled from Washington, D.C., where he’s based, to San Francisco for a conference this week. Dyrud said he’d never done business with SVB prior to running EarthOptics, but he’s spoken with people at the event who have much longer and deeper ties to the bank through venture debt arrangements and other types of financing.
“There are some that are more loyal than I,” he said.
Like buying Taylor Swift tickets
Will Glaser would put himself in the more loyal category, though he had an equally chaotic four days as he tried to shore up his company’s liquidity.
Glaser is founder and CEO of Grabango, a developer of checkout-free shopping technology. He’s a longtime Bay Area technologist, having co-founded Pandora in 2000.
Grabango was more limited than some other companies in how it could respond to the SVB crisis because of the terms of its agreement with the bank. Grabango counts on the bank for a venture debt line, which includes a provision that forbids the company from doing much banking with other institutions.
That exclusivity created a huge headache for Glaser over the weekend. He wasn’t sure how he’d be able to come up with the funds needed to meet March 15 payroll without breaching his company’s covenant with SVB. And nobody was picking up the phone at the bank to tell him it was OK, or alternatively, to help him get an additional short-term loan from SVB.
“I was definitely scrambling with my team and investors to line up alternatives,” Glaser said. “There was never a moment where I thought we’d lose our deposits, but it was definitely a liquidity crunch. Would we have money and time to make payroll?”
Glaser said he was communicating all weekend with his investors and lawyers from Orrick, Herrington & Sutcliffe. They were discussing all possible contingencies and trying to determine if there were any emergency funding options to pay the company’s 110 staffers without potentially breaking the terms of its SVB contract. That could’ve involved “me funding payroll personally” or “one of our investors leaning in,” he said.
Ultimately, Glaser was relieved of having to make a tough decision. All of Grabango’s cash at the bank, which totals in the double-digits millions, would be available by Monday, in time for the company to transfer money to its payment service provider and meet payroll by Wednesday.
Not that it was smooth sailing on Monday, when Glaser was among the many SVB clients trying to get everything back up and running. The bank’s tech system wasn’t prepared for the onslaught.
“I’m on the SVB website and I felt a little like a teenager trying to buy Taylor Swift tickets,” Glaser said,
Despite the madness that spanned Thursday to Monday, Glaser is now more confident than ever with his banking situation. Prior to the run on SVB, Grabango’s deposits weren’t protected. Now they are, under the government’s action to protect depositors, whether insured or uninsured.
Grabango even pulled down an extra credit line with SVB this week, giving the company more access to capital for its hardware business.
“I think the world will diversify more going forward,” Glaser said. “But at the moment, as long as Silicon Valley Bridge Bank is 100% federally guaranteed, there’s no need to diversify. There’s no safer place to be.”
— CNBC’s Rebecca Smith contributed to this report
WATCH: Here’s how legislators are looking at the collapse of SVB
The Nasdaq MarketSite in New York, June 9, 2023.
Michael Nagle | Bloomberg | Getty Images
Silicon Valley executives and financiers publicly opened their wallets in support of President Donald Trump’s 2024 presidential run. The early returns in 2025 aren’t great, to say the least.
Following Trump’s sweeping tariff plan announced Wednesday, the Nasdaq suffered steep consecutive daily drops to finish 10% lower for the week, the index’s worst performance since the beginning of the Covid pandemic in 2020.
The tech industry’s leading CEO’s rushed to contribute to Trump’s inauguration in January and paraded to Washington, D.C., for the event. Since then, it’s been a slog.
The market can always turn around, but economists and investors aren’t optimistic, and concerns are building of a potential recession. The seven most valuable U.S. tech companies lost a combined $1.8 trillion in market cap in two days.
Apple slid 14% for the week, its biggest drop in more than five years. Tesla, led by top Trump adviser Elon Musk, plunged 9.2% and is now down more than 40% for the year. Musk contributed close to $300 million to help propel Trump back to the White House.
Nvidia, Meta and Amazon all suffered double-digit drops for the week. For Amazon, a ninth straight weekly decline marks its longest such losing streak since 2008.
With Wall Street selling out of risky assets on concern that widespread tariff hikes will punish the U.S. and global economy, the fallout has drifted down to the IPO market. Online lender Klarna and ticketing marketplace StubHub delayed their IPOs due to market turbulence, just weeks after filing with the Securities and Exchange Commission, and fintech company Chime is also reportedly delaying its listing.
CoreWeave, a provider of artificial intelligence infrastructure, last week became the first venture-backed company to raise more than $1 billion in a U.S. IPO since 2021. But the company slashed its offering, and trading has been very volatile in its opening days on the market. The stock plunged 12% on Friday, leaving it 17% above its offer price but below the bottom of its initial range.
“You couldn’t create a worse market and macro environment to go public,” said Phil Haslett, co-founder of EquityZen, a platform for investing in private companies. “Way too much turbulence. All flights are grounded until further notice.”
CoreWeave investor Mark Klein of SuRo Capital previously told CNBC that the company could be the first in an “IPO parade.” Now he’s backtracking.
“It appears that the IPO parade has been temporarily halted,” Klein told CNBC by email on Friday. “The current tariff situation has prompted these companies to pause and assess its impact.”
‘Cave rapidly’
During last year’s presidential campaign, prominent venture capitalists like Marc Andreessen backed Trump, expecting that his administration would usher in a boom and eliminate some of the hurdles to startup growth set up by the Biden administration. Andreessen and his partner, Ben Horowitz, said in July that their financial support of the Trump campaign was due to what they called a better “little tech agenda.”
A spokesperson for Andreessen Horowitz declined to comment.
Some techies who supported Trump in the campaign have taken to social media to defend their positions.
Venture capitalist Keith Rabois, a managing director at Khosla Ventures, posted on X on Thursday that “Trump Derangement Syndrome has morphed into Tariff Derangement Syndrome.” He said tariffs aren’t inflationary, are effective at reducing fentanyl imports, and he expects that “most other countries will cave and cave rapidly.”
That was before China’s Finance Ministry said on Friday that it will impose a 34% tariff on all goods imported from the U.S. starting on April 10.
At Sequoia Capital, which is the biggest investor in Klarna, outspoken Trump supporter Shaun Maguire, wrote on X, “The first long-term thinking President of my lifetime,” and said in a separate post that, “The price of stocks says almost nothing about the long term health of an economy.”
However, Allianz Chief Economic Advisor Mohamed El-Erian warned on Friday that Trump’s extensive raft of import tariffs are putting the U.S. economy at risk of recession.
“You’ve had a major repricing of growth prospects, with a recession in the U.S. going up to 50% probability, you’ve seen an increase in inflation expectations, up to 3.5%,” he told CNBC’s Silvia Amaro on the sidelines of the Ambrosetti Forum in Cernobbio, Italy.
Former Microsoft CEOs Bill Gates, left, and Steve Ballmer, center, pose for photos with CEO Satya Nadella during an event celebrating the 50th Anniversary of Microsoft on April 4, 2025 in Redmond, Washington.
Stephen Brashear | Getty Images
Meanwhile, executives at tech’s megacap companies were largely silent this week, and their public relations representatives declined to provide comments about their thinking.
Microsoft CEO Satya Nadella was in the awkward position on Friday of celebrating his company’s 50th anniversary at corporate headquarters in Redmond, Washington. Alongside Microsoft’s prior two CEOs, Bill Gates and Steve Ballmer, Nadella sat down with CNBC’s Andrew Ross Sorkin for a televised interview that was planned well before Trump’s tariff announcement.
When asked about the tariffs at the top of the interview, Nadella effectively dodged the question and avoided expressing his views about whether the new policies will hamper Microsoft’s business.
Ballmer, who was succeeded by Nadella in 2014, acknowledged to Sorkin that “disruption is very hard on people” and that, “as a Microsoft shareholder, this kind of thing is not good.” Ballmer and Gates are two of the 12 wealthiest people in the world thanks to their Microsoft fortunes.
C-suites may not be able to stay quiet for long, especially if the recent turmoil spills into next week.
Lise Buyer, who previously helped guide Google through its IPO and now works as an adviser to companies going public, said there’s no appetite for risk in the market under these conditions. But there is risk that staffers get jittery, and they’ll surely look to their leaders for some reassurance.
“Until markets settle out and we have the opportunity to access valuation levels, public company CEOs should work to calm potentially distressed employees,” Buyer said in an email. “And private company managements should refine plans to get by on dollars already in the treasury.”
— CNBC’s Hayden Field, Jordan Novet, Leslie Picker, Annie Palmer and Samantha Subin contributed to this report.
-
Sports2 years ago‘Storybook stuff’: Inside the night Bryce Harper sent the Phillies to the World Series
-
Sports12 months agoStory injured on diving stop, exits Red Sox game
-
Sports1 year agoGame 1 of WS least-watched in recorded history
-
Sports2 years agoMLB Rank 2023: Ranking baseball’s top 100 players
-
Sports4 years ago
Team Europe easily wins 4th straight Laver Cup
-
Environment2 years agoJapan and South Korea have a lot at stake in a free and open South China Sea
-
Environment2 years agoGame-changing Lectric XPedition launched as affordable electric cargo bike
-
Business3 years agoBank of England’s extraordinary response to government policy is almost unthinkable | Ed Conway