1) Too much negative signaling risk when they don't make follow-on investments
2) Negative returns given the recent downturn
3) The increasing business need to make non-founder-friendly changes in late stage companies (e.g. replacing CEO)
4) Anu/Ali deciding to leave first to start their own fund
I wonder if any of these reasons is a predominant driver.
I think it's clear that the venture world (at least the top of it) had turned itself into an industry on its own. They didn't make money on startup exits anymore, they made it on services. They'd fund startups, get those startups into later rounds by milking less sophisicated VCs[1], push them at their favorite bank, collect fees at each stage, and then take the profits and roll them up into more startus.
Now that the favorite bank is dead, this gravy train is over immediately. And the smart VCs at the top of the heap are the ones to exit the wagon first.
Honestly, the industry has had a toxic feel for a while. But the last 72 hours have made it clear that there was just no soul left.
[1] Yes, this sounds like a pyramid scheme to me too.
You do realize YC's equity returns from Airbnb & Doordash probably cover their entire history of funding startups?
Again, the timing of this makes it abundantly clear that something YC was doing in the years before SVBs failure is instantly impossible now that it's dead.
Also its not a coincidence that investors in SVB aren't getting money back from FDIC, only depositors, YC was an investor (and prob a depositor), they lost money and now have to lay people off. I would imagine other VC firms might be in the same scenario.
Later on, will this period of time be thought of as dot com bust 2.0?
Per SVB’s recent K, Net Interest Income: 4.065bn (after provisions) Non interest income: 1.728bn
Deposits fund the net interest income
At a minimum, it takes longer than 3 days to make a big change like this. I realize that's not a persuasive argument though, since there is endless supply of explanations one can come up with (what if they knew about SVB beforehand!)
(Being insolvent isn't actually enough to kill a bank as long as the run doesn't start. Of course, here the bank dies when the regulator decides it dies anyway.)
Explain the selling of stock by the executives then.
…but that's not enough to make a bank fail, it's just bad news for shareholders.
And as for assuming good faith that this was a fait accompli already in progress... I'm sorry, but I can't get past "We're doing this on the first business day following the biggest upset to our industry in a decade and a half. But that's just a coincidence!"
FWIW I don't think the difference is spin, I think it's the opposite—from my perspective (I'm not privy to the inside discussions) this change is not a reaction to short-term business climate, it's a vision thing. Most people underestimate the power of having just one thing to focus on and knowing exactly what it is. It's a cliché everyone pays lip service to but almost no one actually does. It was a huge insight for me that running HN is all about focusing on one thing*—it's a kind of superpower that turns a surprising number of hard calls into easy calls.
* https://hn.algolia.com/?dateRange=all&page=0&prefix=true&sor...