Silicon Valley banks have long been considered the lifeblood of tech startups because many traditional mortgage lenders are afraid to take over high-risk projects that Silicon Valley banks dare to fund。Billions of dollars of venture capital flow into and out of the bank's coffers every day。

But it is such a 40-year-old and historically well-run big bank, but yesterday "thunderbolt"。On Thursday, local time, Silicon Valley Bank's shares plunged more than 60 percent, the biggest one-day drop on record, and its market value evaporated by $9.4 billion.。

Silicon Valley Bank Thunder？

According to financial update data late Wednesday local time, Silicon Valley Bank launched 17.$500 million stock offering to shore up its balance sheet。In an investor prospectus, it said it needed the proceeds to fill a $1.8 billion shortfall caused by the sale of a $21 billion portfolio of loss-making bonds made up primarily of U.S. Treasuries.。At the same time, Silicon Valley Bank also raised $500 million from the US Pan-Atlantic Investment Group (General Atlantic).。and plans to raise funds through the sale of common and preferred stock 22.500 million dollars。

As a large regulated bank, Silicon Valley Bank is seen as a stabilizing force。But its latest financial strategy has sounded alarm bells among the company's customer base.。Because the sudden fundraising caused investors to panic about their liquidity.。

These troubles come at a particularly difficult time for the Silicon Valley region。According to PitchBook, the volume of venture capital transactions fell by more than 30% last year to $238 billion.。While that's still a historically high number, the dearth of IPOs and the continued decline in valuations of once-high-earners suggest there will be more pain in 2023.。

According to Silicon Valley Bank's mid-quarter update, one of the bank's main problems has to do with the amount of money customers spend。Total client funding has declined over the past five quarters, and cash burn is growing rapidly despite a slowdown in venture capital。Silicon Valley Bank said: "Customer cash consumption is still about 2 times higher than before 2021 and has not yet adapted to the slower funding environment.。"。

In January, Silicon Valley banks expected average deposits of $171 billion to $175 billion in the first quarter.。That forecast now drops to $167 billion to $169 billion.。The bank expects customers to continue to burn cash at essentially the same level as in the last quarter of 2022.。

Venture Capital Companies Withdraw

In the face of this liquidity crisis in Silicon Valley banks, venture capital firm Tribe Capital advises many portfolio companies to withdraw some of their funds if they are unable to withdraw cash completely from Silicon Valley banks.。

Founders Fund, a venture capital fund co-founded by "Silicon Valley Godfather" Peter Thiel, is understood to have asked its companies to divest from Silicon Valley Bank because of concerns about its financial stability and said there would be no adverse impact from withdrawing funds from the bank.。Coatue also told its portfolio companies that it would strongly consider withdrawing funds from Silicon Valley banks.。

In addition, Union Square Ventures told portfolio companies to "keep only a minimal amount of money in Silicon Valley bank cash accounts."。Garry Tan, president and CEO of Y Combinator, warned its pitched startups that the solvency risks of Silicon Valley banks are real and hinted that they should consider limiting their exposure to lenders, preferably to no more than $250,000。

But some venture capitalists say they should stay calm because the real problem comes mainly from panic。Some VCs are reportedly advising to put six months of cash in other banks, but otherwise not to fuel a possible bank run。

In response, some analysts point out that if even Silicon Valley banks have problems now, investors can't help but wonder what will happen to other banks that are not as good as Silicon Valley banks in terms of assets and reputation.。What the market is most worried about is that the bursting of the tech bubble will be transmitted to the U.S. financial system, so that the bursting of the dotcom bubble and even the financial crisis at the beginning of this century will be repeated.。

Scott Orn, chief operating officer of Kruze Consulting, said the Silicon Valley bank is "the apple of Silicon Valley's eye" and a "strong franchise," and he hopes it will weather this difficult period, possibly even being acquired by a bigger bank.。For his clients (hundreds), the divestment of Silicon Valley banks could make it more expensive to borrow later。"Losing a major debt provider in the risky debt market could lead to higher funding costs," Orn said.。