A few banks benefited from some startups that withdrew funds from the now-failed Silicon Valley Bank.
(Bloomberg) — A few banks benefited from some startups that withdrew funds from the now-failed Silicon Valley Bank.
The chief executive officer of Mercury, Immad Akhund, tweeted that his “DMs + emails are going a little crazy” and posted a link for those seeking to open an account. The company describes itself as “financial technology company, not a bank,” on its website. Its banking services are provided by Choice Financial Group and Evolve Bank & Trust.
First Republic Bank and Jiko and are among other firms that startups, venture capitalists and their backers moved capital to, according to people familiar with the matter.
“We are advising our entire portfolio to have two bank accounts going forward,” said Josh Chapman, managing partner at Konvoy Ventures, which backs video-game industry startups among others. One account should be with a large institution like JPMorgan Chase & Co. or Bank of America, and another with a startup-focused bank like First Republic, Mercury or Brex, he said.
Jordi Hays, chief executive officer of Capital, a startup that offers high-yield business checking accounts to startups, said this is “without a doubt the biggest week in our company’s history in terms of deposit growth.” Capital saw 10 times the amount of deposit volume this week compared with last week and a mid-double-digit increase in overall deposit base, Hays said.
“It’s a weird position to be in where I’m not excited to see a titan of our industry fall,” Hays said, “but we’ve benefited from it significantly.”
London-based Revolut has also seen inflows. On Thursday, Revolut’s unit servicing businesses recorded inflows from SVB accounts that were 16.5 times higher than normal, a person familiar with the matter said, asking not to be identified discussing private matters.
KeyCorp’s KeyBank experienced over $1 billion of inflows from SVB clients yesterday and today, according to a person familiar with the matter. A spokesperson declined to comment.
In some cases, venture capitalists had to facilitate introductions between founders and banks they’ve never done business with previously, according to people familiar with the matter. Calls and emails have linked startups with not only smaller lenders like Western Alliance Bancorp, but also bigger firms like Goldman Sachs Group Inc. and JPMorgan, they said.
JPMorgan received dozens of incoming client calls asking to move from SVB to the company, according to a person familiar with the matter. The company has several former SVB veterans in its venture capital unit, which the firm has been building up for the last three years.
It’s not all good news for the potential beneficiaries. First Republic, a California lender that banks startups and technology companies, saw its shares plunge by a record at the open Friday on concerns its business model could suffer from SVB-like problems.
–With assistance from Abhinav Ramnarayan, Tom Metcalf and Max Reyes.
(Updates with KeyBank information in 8th paragraph.)
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