Good day. SVB Capital, the nearly $10 billion venture-capital investing sibling of failed Silicon Valley Bank, is reassuring its portfolio startups, investing firms and limited partners that it is still up and running after parent company, SVB Financial Group, filed for bankruptcy on Friday.
“The SVB Capital funds and their general partner entities are not included in SVB Financial Group’s Chapter 11 proceeding and SVB Capital is operating in the ordinary course,” the investing unit said Monday in an internal email viewed by WSJ Pro. “We remain focused on delivering value for our LPs by investing in some of the world’s most innovative fund managers and companies,” the email said.
SVB Capital is both a direct investor in startups—including online residential-real-estate startup Opendoor Technologies Inc.—and a fund of funds backing venture-capital stalwarts like Sequoia Capital and others.
SVB Financial owned Silicon Valley Bank until roughly two weeks ago, when the bank was taken over by federal regulators following a run on deposits. The Federal Deposit Insurance Corp. has since renamed it as Silicon Valley Bridge Bank.
William Kosturos, SVB Financial Group's chief restructuring officer, said in a statement Friday that the chapter 11 process will allow SVB Financial to protect its more valuable assets, singling out SVB Capital, which is a subsidiary that operates as a separate legal entity.
By filing for bankruptcy, SVB Financial is hoping to preserve the value of SVB Capital and other assets by ridding them of any liabilities associated with the parent company, said Jay Ritter, a finance professor at the University of Florida’s Warrington College of Business.
The idea is to make SVB Capital as appealing as possible for a potential buyer, a process that is already underway “and has attracted significant interest,” SVB Financial said Friday.
But selling a VC firm in today’s down market won’t be easy, analysts said. With valuations dropping from towering 2021 highs—and fundraising and initial public offerings slowing to a crawl—even the healthiest investing firms are mostly laying low.
Worse, SVB Financial's fourth-quarter report cited losses of more than $100 million at SVB Capital by the end of 2022, which it attributed to depressed valuations and other distressed market conditions.
And now on to the news...
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