Silicon Valley Bank crisis: VC firm warned on red flags last year

Greenoaks Capital Partners warned its startup founders of potential red flags at Silicon Valley Bank in November, according to aAt 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 itMehta, 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.

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