Tim Mayopoulos attends the Bilt Rewards Launch Party at Equinox Hotel New York at Hudson Yards on June 22, 2021 in New York City.
Sean Zanni | Patrick Mcmullan | Getty Images
Three days into his tenure as the government-appointed CEO of Silicon Valley Bank, Tim Mayopoulos has a message for his high-profile venture capital and startup clients: bring your money back
That was consistent in all of Mayopoulos’ responses when he answered over 400 questions from concerned customers in a 30-minute Zoom call on Wednesday.
“There is no safer place in the US banking system to put your deposits,” Mayopoulos said on the call, which CNBC attended and first reported. He urged customers to return their funds to the bank and immediately notify their relationship manager teams of any issues with incoming or outgoing transfers, worrying many executives who were unable to withdraw their deposits from the bank last week.
Mayopoulos was joined by SVB operations manager Phil Cox, the sole remaining executive from the core C-suite team. SVB’s former CEO and CFO are no longer employed by the bank, Mayopoulos said on the conference call.
While Mayopoulos directs his requests to current and former clients, it’s not clear how long he will stay in his current job as the bank is currently controlled by the Federal Deposit Insurance Corporation. Mayopoulos said he didn’t know what SVB’s “exact final state” would be and gave three options: recapitalization, sale or liquidation.
A recapitalization would allow the SVB to continue as a separate entity. However, this possibility depends on whether another financial institution or group of investors shows up.
“I realize I’m new on the scene,” Mayopoulos said in direct response to concerns from venture capital firms. “They have been patient with us as we went through some of these operational difficulties. All I would ask of you is to give us a chance to win back your trust and confidence.”
Mayopoulos’ pitch was tailored to the venture investors, who flocked to social media to express their shock and dismay at the collapse of a famous Silicon Valley institution. In the call, Mayopoulos repeatedly referred to the “innovation economy” and to a startup ecosystem in which “Silicon Valley has played an important role”.
Customer feedback will be critical to the bank’s future, Mayopoulos said on the conference call. Contributions “from clients and from the venture capital and entrepreneurial community” would shape the timeline for the SVB’s final liberation from government control.
“One of the things I want to convey to you is that you have some agency in that, that you can actually vote to at least send clear signals of what you want the outcome of this process to be,” the CEO said in his prepared remarks . “When our clients choose to take their deposits and hold them in other institutions, that severely limits the range of options we have in terms of the bottom line.”
SVB’s longstanding relationship with Silicon Valley’s most elite venture firms is mutually beneficial and symbiotic.
From its inception at a poker table to its near-fatal bank run last week, SVB has focused on taking risks in a market that most traditional banks avoided. SVB found a niche in venture debt, financing companies that needed cash injections, particularly between funding rounds.
In return for future consideration, often a company’s equity or warrants, SVB became a mammoth player in the venture debt space, spanning from software and internet to life sciences and robotics.
Across its 40+ businesses, SVB grew alongside its depositors, building a lucrative mortgage business and a range of private banking products that enabled it to retain and charm the founders whose fortunes the bank had helped build.
From established companies like Cisco to more modern technology companies like DocuSign and Roku, SVB has focused on providing financing and banking services at every stage of growth.
“There are other places that do venture debt, but Silicon Valley Bank was the £1,000 gorilla in the room,” said Ami Kassar, CEO of corporate lending advisor Multifunding.
Exclusivity contracts, that is, an ironclad promise that a company would keep all of its money with SVB, were an important aspect of these financing deals. When the SVB failed, it confused startups that had traded bank flexibility for liquidity. Some fled the bank, violating their commitments to keep their lights on and their paychecks flowing.
When asked about possible exclusivity violations, Mayopoulos indicated that he understands the emergency measures taken by startups.
“As circumstances have changed and the FDIC is taking action on coverage, we’d love to work with our customers to get those deposits back to us,” the CEO said on the call.
Customers returning would not have to worry about the consequences of violating their agreements, Mayopoulos suggested. He didn’t say what would happen to ex-clients who did the same.
— CNBC’s Cat Clifford contributed to this report.