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Silicon Valley Venture Capitalists Scream for a Bail Out in Reaction to Bank Collapse

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Silicon Valley venture capitalists are screaming for a bail out in response to the recent sudden collapse of Silicon Valley Bank — the second-largest bank failure in history, behind the collapse of Washington Mutual at the height of the 2008 financial crisis.

“YOU SHOULD BE ABSOLUTELY TERRIFIED RIGHT NOW — THAT IS THE PROPER REACTION TO A BANK RUN & CONTAGION @POTUS & @SecYellen MUST GET ON TV TOMORROW AND GUARANTEE ALL DEPOSITS UP TO $10M OR THIS WILL SPIRAL INTO CHAOS,” entrepreneur Jason Calacanis exclaimed.

Entrepreneur Joe Lonsdale insisted that he is “opposed to bail outs,” but nonetheless flirted with the idea of one for the Silicon Valley Bank, tweeting, “Am curious if the innovation world is the only part of our economy that doesn’t deserve a depositor bailout?”

“And can’t help but ask how many equivalent aid packages to Ukraine (0.5 of them?) it takes to resolve the crisis impacting thousands of promising US technology companies,” he added.

In a follow-up tweet, Lonsdale added, “To clarify — I’m opposed to bail outs, and it’s crazy that well-connected-to-DC debt-holders and even equity of banks got bailed out in 2008 (although I understood actions to protect depositors in that crisis).”

Andreessen Horowitz CEO Ben Horowitz retweeted a student who responded to a tweet that read, “Venture capitalists should not be bailed out by taxpayers,” and, “This is the dumbest most insensitive shit I read all day.”

“There are small companies that can’t make payroll. The domino effect to employees is crushing,” venture capitalist Sara Ledterman argued in response to the tweet that read.

Meanwhile, Nanxi Liu, the CEO and cofounder of the digital signage software company Enplug, went as far as to say that a Silicon Valley Bank bailout “would cost the taxpayers nothing,” and would even “make taxpayers money.”

“SVB bailout is COMPLETELY different than bailouts of 2008. Fed stepping in to help depositors would cost the taxpayers nothing, in fact, it would make taxpayers money,” Liu said.

“Gotta disagree with you on this one,” Every Inc. cofounder and president Nathan Baschez reacted in response to the anti-bailout tweet.

“Dunking on VCs is fine but totally misguided,” AirTree partner John Henderson tweeted. “The people who suffer the most here will be the employees of startups who may or may not be able to make payroll.”

“As an industry we don’t focus enough on how we’re perceived outside the industry,” entrepreneur Erik Torenberg commented. “Seeing people misunderstand and blame tech in our moment of need is a wake-up call for us to focus on nailing our external messaging.”

“Less apologizing, more persuading,” he added.

“‘good! let em burn!’ the problem is that if SVB’s depositors get wiped out, all the regional banks are next, because there’s ~no downside in moving cash to a GSIB, and massive downside in staying,” Stedi founder and CEO Zack Kanter wrote.

“so, SVB can’t be sold, can’t be bailed out, and can’t be left to fail. a pickle,” Kanter added.

“One of the stupidest takes I’ve ever seen,” Litquidity Capital founder wrote, claiming, “Bailing out SVB would be to help thousands of startups survive and keep hundreds of thousands of people employed.”

You can follow Alana Mastrangelo on Facebook and Twitter at @ARmastrangelo, and on Instagram.

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