Strictly VC - Silicon Valley Bank Shoots Self in Foot

Investors dumped shares of SVB Financial Group and numerous other of U.S. banks after it said it lost nearly $2 billion selling assets following a larger-than-expected decline in deposits. The four biggest U.S. banks lost $52 billion in market value, says the WSJ. We have much more on this below.

Feeling that pressure to find the next Airbnb, Slack or Twilio?
Cut the noise and surface highly-differentiated, reliable insights that can’t be found anywhere else. With the largest private market transcript library, Tegus helps you quickly figure out which deals you want to fast track – and for everything else, you can run your own calls with custom-sourced experts at a fraction of the cost – no markups, ever. Start using Tegus to map markets, source new companies, build conviction and win deals at speed. For a limited time, StrictlyVC readers can trial Tegus for free.

It may go down in the history books about Silicon Valley: the time that its most prominent bank, a bank founded nearly 40 years earlier, inflicted such grievous injury on itself that it had to be rescued by another bank or else risk going down in flames in a single day.

We don’t yet know who that “white knight” will be, but you can bet a lot of conversations are happening right now about who will step in and acquire Silicon Valley Bank, an institution whose shares are down roughly more than 80% in after-hours trading from where they were at the beginning of yesterday. And why? Not because the bank is falling apart at the seams. Instead, because it utterly flubbed some important messaging at the very worst time imaginable.

This, friends, is what is called an own goal.

If you’re just catching up, here’s what happened: Silicon Valley Bank lost $1.8 billion in the sale of U.S. treasuries and mortgage-backed securities that it had invested in, owing to rising interest rates. The bank is also contending with shrinking customer deposits, given that its customer base of largely startups has far less money right now to park at a financial institution.

Because it’s in this spot, it decided to raise a bunch of money to safeguard its business. The plan was to sell $1.25 billion of its common stock to investors, $500 million in convertible preferred shares, and $500 million of its common stock in a separate transaction to the private equity firm General Atlantic. The apparent goal was to project that the bank was being conservative and raising this money to stabilize itself.

Oh, though, how it backfired, and who can be surprised, given it issued its announcement about these plans just as the crypto bank Silvergate was announcing that it was winding down operations.

You might imagine that someone at Silicon Valley Bank would have paused to think: “Hmm, maybe today is not the right time to declare that we’re shoring up our balance sheet.” Evidently, they did not. Instead at the end of the market close yesterday, they put out a convoluted press release that was received so badly that it was almost comical. Except that Silicon Valley Bank is a trusted financial partner to many startups and venture firms that are now nervously scrambling to figure out what to do.

It’s certainly not funny to Silicon Valley Bank’s estimated 6,500 employees or to its CEO Greg Becker, who found himself having to jump on a Zoom call late this morning to assuage panicked customers that it was just a little news release!

More here.

Envisics, a five-year-old U.K. startup that designs holographic in-car technology that projects navigation, safety alerts, and other data on the inside of the windshield, raised a $50 million-plus tranche of a Series C round. The valuation was $500 million. Investors included Hyundai Mobis, InMotion Ventures, and Stellantis. The company has raised a total of $100 million. TechCrunch has more here.

QurAlis, a seven-year-old startup based in Cambridge, Ma., that is developing precision medicines for neurodegenerative diseases such as ALS, raised an $88 million Series B round led by EQT Life Sciences, Droia Ventures, and Sanofi Ventures, with additional participation from the ALS Investment Fund as well as previous investors LS Polaris Innovation Fund, Mission BioCapital, INKEF Capital, Dementia Discovery Fund, Amgen Ventures, MP Healthcare Venture Management, Mitsui Global Investment, Dolby Family Ventures, Mission Bay Capital, and Sanford Biosciences. The company has raised a total of $135.5 million. More here.

Shein, the 15-year-old Chinese "fast fashion" company, plans to raise a $2 billion round at a $64 billion valuation in advance of a planned U.S. IPO later this year, according to Reuters, which also says that UAE sovereign wealth fund Mubadala as well as Tiger Global and previous investors General Atlantic and Sequoia Capital China plan to participate. CNBC has more here.

WHP Global, a four-year-old New York startup that acquires global consumer brands and invests in distribution channels such as digital commerce platforms, raised a $375 million round from Ares Management at a $1.6 billion valuation. Reuters has more here.

Cado Security, a three-year-old London startup that claims that users of its software can analyze data in minutes with forensic-level detail in order to understand the full impact of cloud incidents, raised a $20 million round led by Eurazeo, with Ten Eleven Ventures also contributing. The company has raised a total of $31.5 million. SiliconANGLE has more here.

ClearFlame Engine Technologies, a Chicago startup that modifies truck and train engines to run on a variety of fuels, such as ethanol and ammonia, raised a $30 million Series B round led by Mercuria Energy Group and including Rio Tinto, WIND Ventures, and COPEC, as well as previous investor Breakthrough Energy Ventures. Reuters has more here.

Fly by Jing, a four-year-old Los Angeles startup whose Chinese food brand is sold on a wholesale business via retailers such as Kroger and Albertsons, as well as direct-to-consumer through its website and others (including Whole Foods Market), raised a $12 million Series B round from Prelude Growth Partners and previous investor Pendulum. Retail Dive has more here.

Masttro, a 13-year-old New York company that claims its platform uses AI to help ultra high net worth families manage their investments, raised a $43 million round led by FTV Capital, with Citi Ventures also chipping in. More here.

Matchday, an Irish startup that develops and distributes web3 soccer games, raised a $21 million seed round. Play Time (soccer star Lionel Messi's VC firm) was the lead investor, while Courtside Ventures, Greylock, HackVC, Capricorn Investment Group, and Horizons Ventures also participated. Decrypt has more here.

Mythic, an AI chip startup that last November reportedly ran out of capital, just announced a $13 million round led by existing investors Atreides Management, DCVC and Lux Capital alongside new investors Catapult Ventures and Hermann Hauser Investment. While the tranche is a fraction of the startup’s previous raise ($70 million), Mythic it will enable it to bring its “next-generation” product — an improved energy-efficient AI processor — to market. TechCrunch has the story here.

Proven, a crypto startup that develops zero-knowledge proofs that help exchange and asset management clients prove their solvency, raised a $15.8 million seed round. Framework Ventures was the deal lead, with additional capital provided by operator-investor Balaji Srinivasan and others. CoinDesk has more here.

Synctera, a three-year-old Palo Alto startup that enables banks to offer fintech products to their customers, raised a $15 million round led by NAventures, with additional capital provided by The Banc Funds, Veritex Community Bank, Midland States Bank, and Emigrant Bank. The company has raised a total of $60.4 million. TechCrunch has more here.

Till Payments, an 11-year-old Sydney company that has built a payments platform for businesses, raised a $46.1 million Series D round in advance of plans to go public later this year. Silva Fortune was the deal lead. The company has raised a total of $142.2 million. StartupDaily has more here.

Violet, a six-year-old Seattle startup that claims to have created the world’s first compliant decentralized exchange for both DeFi and traditional finance, raised a $15 million. Investors included BlueYard Capital, Balderton Capital, Ethereal Ventures, FinTech Collective, Brevan Howard, and Coinbase Ventures. More here.

Adaptis, a five-year-old Toronto startup whose platform is designed to help owners, developers, architects, and engineers design and build greener buildings, raised a $1.5 million pre-seed round led by 2048 Ventures, with Powerhouse Ventures and Blue Vision Capital also investing. BetaKit has more here.

FOUNT Global, a one-year-old startup based in Washington, D.C., whose software platform helps companies identify and address issues leading to employee dissatisfaction, raised an $8 million Series A round led by Lavrock Ventures, with Osage Venture Partners and Grotech Ventures also joining in. The company has raised a total of $10.8 million. More here.

Houseware, a two-year-old San Francisco startup that aims to give management and revenue teams access to cross-functional data in order to increase sales, raised a $2.1 million seed round led by Tanglin Venture Partners; additional investors included GTMfund and Better Capital. Forbes has more here.

Iron Health, a New York startup that enables OB/GYNs to provide virtual care to their patients, raised a $4.5 million. Investors include Redesign Health and the March of Dimes' innovation fund. More here.

Monnai, a startup based in Wilmington, De., that says it helps its financial customers navigate regulatory landscapes and battle fraud, raised a $6.5 million Series A round led by Tiger Global, with participation from existing investors including Better Tomorrow Ventures, 500 Global, and Emphasis Ventures. The company has raised a total of $10 million. VentureBeat has more here.

QuantWare, a three-year-old Dutch startup that builds quantum processors for research and commercial usage, raised a $6.3 million seed round led by Forward One, with QDNL Participations and Graduate Entrepreneur also anteing up. The company has raised a total of $15.7 million. TechCrunch has more here.

Tweed, a one-year-old Tel Aviv startup that helps Web 2.0 companies that want to add a web3 component to their service, announced that it raised a $4 million seed round last summer led by Accel, with Communitas Capital Partners and Zero Knowledge Ventures also pitching in. TechCrunch has more here.

Wave Life, a two-year-old startup based in Los Altos, Ca., whose platform provides users with "emotional well-being coaching," raised a $6 million seed round led by Santé Ventures, with Hannah Grey, Joyance Capital, Gaingels, and Telocity Ventures also investing. The company has raised a total of $10 million. More here.

Wheel the World, a six-year-old Berkeley, Ca., startup that provides travel accommodations and experiences for people with disabilities, raised a $6 million seed round led by Kayak Ventures and including Detroit Venture Partners and REI Co-op Path Ahead Ventures, CLIN Fund, Amarena, and WeBoost. The company has raised a total of $10.6 million. TechCrunch has more here.

Zenhub, a nine-year-old Vancouver startup whose project management software allows non-technical users to create issues and track projects, raised a $7.2 million Series A round led by Yaletown Partners, with BMO Capital Partners and BDC Capital also taking part. The company has raised a total of $14.7 million. TechCrunch has more here.

Nigel Morris co-founded Capital One and is now co-founder and Managing Partner of QED Investors. Affinity spoke to him about his path to VC, advice for investors still establishing themselves in the industry, and the advantages of being based outside of Silicon Valley. Read part 1 of the blog.

Railsr, a venture-backed London, U.K. embedded finance startup formerly known as Railsbank and once worth nearly $1 billion, announced today that it has been acquired by a shareholder consortium and that as part of the deal, it’s going into administration so it can continue as a going concern as it restructures. TechCrunch has more here.

Elon Musk is apparently laying plans for a new community outside Austin.

Sheikh Tahnoon bin Zayed al-Nahyan has been appointed chair of the $790 billion Abu Dhabi Investment Authority, the main sovereign wealth fund of the United Arab Emirates’ capital. The FT calls it a sign of his expanding influence.

Garry Tan, the president of Y Combinator, reportedly sent an internal message to the many founders in the program today, reminding them the FDIC only insures deposits up to $250,000 in case they wanted to get their money out of Silicon Valley Bank: “We have no specific knowledge of what’s happening at SVB. But anytime you hear problems of solvency in any bank, and it can be deemed credible, you should take it seriously and prioritize the interests of your startup by not exposing yourself to more than $250K of exposure there. As always, your startup dies when you run out of money for whatever reason.”

It's not just Elon Musk who has stopped paying his bills. As borrowing costs soar and the work-from-home trend leaves downtown offices half empty, even wealthy landlords are defaulting on their mortgages -- a strategy to open the door for debt restructuring, says Bloomberg.

AI-generated cocktails. “It’s passed medical exams, it’s passed the bar — why not see what it can do behind a bar?"

A vegan's fight to keep a vanity license plate deemed vulgar ("LOVETOFU").

Insider trading or was it Bobby Axelrod?

Can money buy happiness? Scientists say it can.

The best Patricia Highsmith books.

Fancy fabric shavers.