Cash is King but when the Castle (Bank) becomes unsafe, where does the King go?
TLDR: Silicon Valley Bank mismanaged risks, announced sale of securities at a loss to meet withdrawal obligations, majority-depositors were VCs and their portfolio companies in the tech and healthcare industry who were shrewd to act optimally (in a game-theoretic sense), spread the word through network-effects, led to ‘bankrun’, FDIC took-over and placed under receivership, faced with systemic risk, the feds, treasury, and FDIC intervened to make the depositors whole. What can we learn from this?
Silicon Valley Bank (SVB) is (was) U.S’s 16th largest Bank with assets totaling $220 Billion. What can go wrong in less than a week?
Was this panic/fear-driven market dynamics/game necessary? No but, if the highly-regulated Bank fails on it’s basic obligations and induces unaccounted risk, it became inevitable.
So, where does the king go? The fund outflows could go to:
Source: DiligenceExpress; extracted from SEC Form ADV filings. Information is presented “as is”, with no liability as to errors in data extraction or underlying filings. Contributed by Jacob Silverman, Independent Journalist.
ManagerName | PrivateFundName | PrivateFundGrossAssetValue | FilingDate |
---|---|---|---|
.406 Ventures Management, L.P. | POINT 406 VENTURES 2016 OPPORTUNITIES FUND, L.P. | 127,188,721.00 | 3/31/2022 |
.406 Ventures Management, L.P. | POINT 406 VENTURES II, L.P. | 409,273,788.00 | 3/31/2022 |
.406 Ventures Management, L.P. | POINT 406 VENTURES III, L.P. | 666,606,886.00 | 3/31/2022 |
.406 Ventures Management, L.P. | POINT 406 VENTURES IV, L.P. | 338,937,953.00 | 3/31/2022 |
.406 Ventures Management, L.P. | POINT 406 VENTURES OPPORTUNITIES FUND II, L.P. | 99,733,645.00 | 3/31/2022 |
11.2 Capital Management, LLC | 11.2 CAPITAL HH, LLC | 13,288,984.00 | 5/6/2022 |
11.2 Capital Management, LLC | 11.2 CAPITAL I, L.P. | 441,915,281.00 | 5/6/2022 |
11.2 Capital Management, LLC | 11.2 CAPITAL II, L.P. | 100,823,605.00 | 5/6/2022 |
11.2 Capital Management, LLC | 11.2 CAPITAL IVY, LLC | 85,626,647.00 | 5/6/2022 |
1214 Capital, LLC | CMIC, LLC | 12,305,000.00 | 5/9/2022 |