In all, he helped broker more than 20 deals over the weekend with various lenders offering rescue financing to help companies weather the storm. Markell says his firm started preparing for the possibility of an SVB bank run weeks ago and when the bank went under last week, he was able to steer two clients who were in the midst of negotiating venture debt deals with SVB to other lenders. "We received hundreds of inbound emails from lenders saying, we are open for business, we are lending money, send us your opportunities," said John Markell, managing partner at Armentum Partners, a Menlo Park-based investment bank that brokers venture debt deals between startups and lenders. None of this has stopped other lenders from stepping up to try to win some of SVB's debt business. Borrowers are still required to service their debts and meet the terms of their loan agreements, which includes holding deposits at the bank. "I mean I feel it's ridiculous to even think of calling up a Graylock to be like, can we do diligence on your company," the managing director said, "I put my foot down saying I'm not doing that because we should just be giving that money out, we are in no position to be diligencing someone else."Īnother person in SVB's venture debt business said that employees are working hard to maintain "business as usual" so as to make SVB's loan portfolio more attractive to a potential buyer. Normally, such a credit line request would require a diligence call with the company's VC backers to approve the use of funds, a practice that has fallen by the wayside amid the chaos of the past 72 hours. In the meantime the bank has been accelerating approval of credit line draw requests from existing customers and as of Monday night all borrowers were able to once again access their lines of credit, according to two people familiar with the matter. "You're guess is as good as mine, we're going off what we're seeing on CNBC," said a former managing director at Silicon Valley Bank who is now working for the entity created by the FDIC to administer SVB's assets. It remains an open question if a buyer will materialize to take over this sizable loan book, even among SVB insiders. But these investors make their money by charging interest on a loan, rather than taking a chunk of the company. Venture debt, like a typical venture-capital investment, involves betting big on fledgling startups that may be far off from profitability. The bank was willing to work with risky unproven companies that other financial institutions may have shunned and by the time of its demise it held nearly $7 billion of venture debt on its books. When SVB was taken over by the Federal Deposit Insurance Corporation on Friday, in addition to more than $175 billion in customer deposits, the bank also held on its balance sheet more than $70 billion in unfunded credit lines, encompassing everything from traditional startup venture debt, to real estate financing, and even loans to premium wineries.įor decades, SVB had become the go-to provider to startups of non-dilutive capital, a service that only became more crucial in recent months as VC funding dried up and founders strained to extend runway. "From a purely business standpoint, it's just an absolute home run for us," Helwani told Insider. He's one of many who now stand to benefit from the sudden disappearance of one of Silicon Valley's most reliable lenders. Helwani, the founder and CIO of i80 Group which provides flexible capital solutions, or debt, to startups, says he got about 30 similar messages over the weekend from startups looking for new debt options in the wake of SVB's sudden collapse. Founders may face higher prices for debt and lenders unwilling to be lenient when times get tough.Īt around 10 pm on Sunday night, as the entire venture capital ecosystem was speculating about the future of the American banking system after the collapse of Silicon Valley Bank, Marc Helwani got an email from the CFO of a fintech startup, looking to refinance a $126 million credit line that his company had at Silicon Valley Bank.The demise of one of the startup ecosystem's lenders has created an opportunity for others.Silicon Valley Bank had more than $70 billion in credit lines on its books when it failed.Account icon An icon in the shape of a person's head and shoulders.
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