I am sure WSJ and other might, but frankly I have stopped listening to what many pundits and analysts have to say on the matter. Just reading the news on the SVB debacle is enough to affirm few know what they were talking about. Too many want to sell theater and use it to make a political statement and aren’t really concerned with the facts.
One things that will come out is that the venture portfolio will make it very difficult for a big commercial bank to buy those assets. But that is not because they are money-bad deals, but due to the risk grading of the borrowers causing them to be special mention assets.
In my working days I managed the account of a non-bank venture debt lender whose largest competitor was SVB. We were the lead lender in its financing syndicate for two funds and participants in 2 others. This gave me access to the firm’s performance from before the ‘08 recession through ‘20 so I have some insight into how that market works and the historical returns venture debt portfolios yielded. There are undoubtedly losers in any fund/portfolio, but the equity component makes it so just a few winners can carry the whole lot. Not one fund had a negative return, even through’08-‘11.
I am pretty certain the same is true with SVB even up to now. My power and WiFi have been out and reading K’s and Q’s on a phone isn’t worth it, but I will post up some details of historical performance when nice we are back up and I can use my laptop. There is no reason to believe performance would have markedly degarded and very well may have improved with the increased discipline we saw from VC’s through the pandemic.
Edit: I did want to comment on the bolded. Customers should expect banks will preserve their deposits, but only neophytes would expect that banks should have all client’s funds liquid and available at all times. That simply isn’t how banks work - and it was that sophomoric expectation that broke SVB. That is one aspect to tech companies that I do not miss - lots of highly educated 20 and 30-somethings that had grand ideas but little grounding in reality. I often had to be the adult in the room - not a very fun balancing act.
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