- Greenoaks Capital Partners warned its startups about Silicon Valley Bank in November, Bloomberg said.
- "In the worst cases, you want to be first to pull deposits rather than last."
Greenoaks Capital Partners warned its startup founders of potential red flags at Silicon Valley Bank in November, according to a Bloomberg report.
At the time, Neil Mehta, managing partner at Greenoaks, wrote in an email that a high-interest-rate environment could spell trouble for banks, including SVB.
As the Federal Reserve tightens monetary policy, lenders would have to offer higher rates to customers or else risk losing clients to rivals, he said.
"In the worst cases, you want to be first to pull deposits rather than last," Mehta wrote, per the report.
More than a dozen Greenoaks startups withdrew an estimated $1 billion from SVB over recent months, according to Bloomberg.
Shares of SVB have plunged more than 86% over two days as other VCs urged their startups to pull deposits from the bank. Trading was halted early Friday as SVB is now seeking a sale after it failed to raise fresh capital, CNBC reported.
Mehta, whose firm has $15 billion under management, also said in November that First Republic Bank faced a similar risk. He encouraged founders to take their funds to bigger banks that didn't have as much risk. He also noted, per Bloomberg, that a serious issue at SVB or First Republic was "highly unlikely."
"This email probably won't age well," Mehta wrote.
Meanwhile, billionaire investor Bill Ackman warned in a tweet that more dominoes could continue to fall after SVB's turmoil. And Scott Melker, the host of the popular "Wolf of All Streets" podcast, called the crisis an "extinction level event."
"Silvergate Bank going under is bad. Silicon Valley Bank going under would be exponentially worse. Let's hope that doesn't happen," Melker tweeted.