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Founders Fund and Silicon Valley Bank - Axios
webCredibility Rating
3/5
Good(3)Good quality. Reputable source with community review or editorial standards, but less rigorous than peer-reviewed venues.
Rating inherited from publication venue: Axios
Tangentially relevant to AI safety as background on the SVB collapse, which affected many AI startups and VC firms operating in the AI ecosystem; not directly about AI safety topics.
Metadata
Importance: 18/100news articlenews
Summary
This Axios article details how Founders Fund's risk-management decision to move capital out of Silicon Valley Bank in March 2023 contributed to a historic bank run resulting in $42 billion in withdrawals. The piece examines the sequence of events, internal decision-making at Founders Fund, and the subsequent criticism from other venture capitalists who accused the firm of deliberately triggering the crisis.
Key Points
- •Founders Fund operations executives moved firm capital to larger banks Thursday morning after SVB's share sale announcement, without involvement from Peter Thiel.
- •The firm then advised portfolio companies to move money out of SVB, spreading widely and amplifying an already growing panic.
- •Founders Fund had just initiated a capital call days earlier, wiring LP funds directly into its SVB account.
- •Other VCs accused Founders Fund of intentionally triggering the bank run, though the firm maintained it was purely risk management.
- •SVB ultimately saw $42 billion in withdrawals, making it one of the largest bank runs in US history.
Cited by 1 page
| Page | Type | Quality |
|---|---|---|
| Founders Fund | Organization | 50.0 |
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Mar 14, 2023 \- [Economy](https://www.axios.com/economy)
# The story behind Founders Fund and the run on Silicon Valley Bank
- [Dan Primack](https://www.axios.com/authors/danprimack)
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Illustration: Lindsey Bailey/Axios
Silicon Valley Bank's share sale announcement [last Wednesday night](https://www.axios.com/2023/03/14/week-that-killed-silicon-valley-bank) caused concern at Founders Fund, a large venture capital firm that did most of its own banking with [SVB](https://www.axios.com/economy-business/svb-silicon-valley-bank), Axios has learned.
**Behind the scenes:** By Thursday morning, Founders Fund's top operations executives were on the phone, quickly deciding to [move firm capital](https://www.axios.com/2023/03/11/the-largest-bank-run-in-history) to a number of bigger banks. Firm founder Peter Thiel was not part of the conversation.
- One source says that the assumption was that they'd return the money to SVB after the crisis had ended.
- Discussions began later that morning with some members of Founders Fund's investment team who, once alerted
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