Venture Catastrophists | No Mercy / No Malice

Abstraction: SVB collapse exposes VC libertarian hypocrisy versus banking trust

Key points:

• Silicon Valley Bank collapsed in March 2023 after $42 billion was withdrawn in a single day, triggered by VC firms urging portfolio companies to pull funds
• Scott Galloway parallels SVB to the 1907 Knickerbocker Trust panic, noting J.P. Morgan pledged $8M ($255M today) to stop the contagion while modern VCs amplified fear on Twitter
• SVB's failure stemmed from duration mismatch (long-term bonds vs. short-term startup deposits), failed equity raise communication, and successful lobbying to weaken stress-test thresholds
• "Venture Catastrophists" — VCs who publicly fear-mongered to pressure a federal bailout — contrasted with hundreds of VC firms who quietly signed a letter committing to keep business with SVB
• Janet Yellen and the FDIC backstopped depositors as standard operating procedure; Galloway credits federal institutions, not individual billionaires, as the real stabilizing force
• Marc Andreessen and Peter Thiel, with crypto interests in destabilizing the dollar, are singled out as capable of stopping the bank run with a tweet but choosing not to

Connections: Silicon Valley Bank · Scott Galloway · Janet Yellen · Venture Capital · Banking Regulation · Financial Crisis

Source: https://www.profgalloway.com/venture-catastrophists/