• Union Square Ventures warned portfolio companies in November to diversify their bank deposits.
• The warning, which has not been previously reported, never specifically mentioned SVB.
• But it came after a senior partner became alarmed after reading SVB’s financial statements.

When a senior partner at Union Square Ventures was poring over Silicon Valley Bank’s financial statements last November, he became so alarmed by the bank’s financial situation that he made an urgent plea to his partners: Alert every single portfolio company of the company so that they diversify their bank deposits and not concentrate on a single institution.

The warning, which has not been previously reported, never specifically mentioned SVB. But he gave USV’s founders a prescient message four months before federal regulators shut down the bank last week, sparking a banking catastrophe not seen since the global financial crisis, according to two sources with direct knowledge of the case. matter they were not authorized to discuss. in public.

“If you read SVB’s financial statements, which most people don’t, you could see a looming liquidity crisis,” a source said. “A liquidity crisis was quite significant and real.”

USV’s initial message to the founders illustrates how regulators, auditors, ratings agencies, and most other venture capital firms missed the warning signs.

It also shows how USV, an early backer of Robinhood, Coinbase, and Etsy, has been far ahead of other companies, not only in smart early bets on startups, but also in their valuable advice for portfolio companies.

Insider reported earlier this year that USV has delivered close to 60% annual return, not including fees, to one of its major backers, UTIMCO, which manages the University of California’s $65 billion endowments. Texas and Texas A&M, putting it in a league of its own among venture capitalists.

venture investment firm Greenoaks Capital Partners also warned its startup founders about potential problems at SVB last November, Bloomberg reports. In December, a New York banker at a large financial institution began receiving calls from current Silicon Valley Bank startup founders asking to open accounts, Insider previously reported. The businessmen wanted to switch after being told by their venture investors that SVB was suffering from “liquidity problems”.

Founders Fund, the venture firm founded by billionaire Peter Thiel that backed Facebook and Airbnb, has been widely criticized for sparking a bank run on Thursday morning after warning founders to get their money out of SVB.

But Neil Ruthven, Founders Fund’s chief financial officer, argued that the company does nothing more than protect its investors’ money.

“By Thursday morning it was clear that we were in the middle of a bank run and we reacted in accordance with our fiduciary duties,” said in a statement to Axios.