Silicon Valley Bank shares plummet, as a mess unfolds

Silicon Stock Valley Bank is down sharply on Thursday following the company’s announcement that it is raising additional capital by selling shares, supporting the rollover of a portfolio of assets into higher-yielding assets and by extending its term borrowing capacity.

Given the recent bank-related carnage in the tech and tech-adjacent worlds, the market fears that all is not well at SVB. Company CEO Greg Becker said in a call with risky clients that their assets were safe and the stock sale had been announced as an attempt to increase flexibility, strength and financial profitability of the bank.

Becker said the bank has “adequate liquidity” to support its customers “with one exception: if everyone thinks SVB is in trouble, that will be a challenge.” The executive asked VC customers to “stay calm. This is my request. We have been there for 40 years, supporting you, supporting portfolio companies, supporting venture capitalists.

The bank’s share price is down more than 60% at press time from a year ago.

In its presentation to investors regarding its various financial moves shared last night, the company noted that venture capitalists were investing less and startup clients were still burning — consuming — cash at an all-time high. The mismatch has led to what the company described as pressure on its “funds flow balance.”

TechCrunch is hearing from some founders and investors that startups are encouraged to consider withdrawing funds from SVB due to concerns about its health; if many do, their actions could exacerbate the mismatch of deposits and withdrawals, perhaps extending the pressure SVB is under.

According to SVB’s mid-quarter update, the company argued graphically that it had a low loan-to-deposit ratio, at 43%. The degree of protection that can provide following a sell-off in the stock price and concern from its core customer base will become clear in the coming days.

TechCrunch actively reports on the industry’s response to SVB news and sales, particularly in regards to how startups are choosing to respond. More soon.

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