Peter Thiel had $80m in Silicon Valley Bank when it went under

Peter Thiel said he had US$50 million (NZ$80m) Silicon Valley Bank when it went under, even after his venture fund warned portfolio companies that the tech-focused lender was at risk.

The veteran technology founder and investor was widely blamed for precipitating a bank run in which depositors tried to pull more than US$40 billion in 24 hours last week. His venture capital firm Founders Fund was among those that had advised clients to spread their deposits to other lenders as concerns about the bank mounted.

But Thiel told the Financial Times this week that he had maintained a substantial personal account at SVB even as fears mounted over its fate and later resulted in a run on the bank that ultimately toppled it.

“I had US$50m of my own money stuck in SVB,” said Thiel, who co-founded tech companies PayPal and Palantir in addition to Founders Fund.

Thiel said he did not draw down from his account because he believed the bank would not fail. His account was frozen when the Federal Deposit Insurance Corporation stepped in and took over SVB on Friday. It is once again accessible after the Federal Reserve intervened on Sunday with emergency funding measures to protect depositors.

Founders Fund is one of Silicon Valley’s most prominent and influential venture capital firms. According to people with knowledge of the matter, the fund was one of the first to begin alerting portfolio companies to risks at SVB, advising them early last week to consider diversifying away from the bank.

But it was not the only venture capital firm to encourage companies to spread their risk, particularly when SVB’s share price started tanking late last week after plans to raise more than $2bn in a share sale were made public.

Andreessen Horowitz suggested founders call their relationship managers to hash out a plan, while Lux Capital and Sequoia Capital stressed the importance of diversifying to spread risk, according to founders backed by the companies and other venture capitalists who share portfolio companies with them.

Founders Fund did not comment on its advice last week, but other venture capitalists who counselled their portfolio companies to move funds last week insisted it was their fiduciary duty to do so, and that they had acted in a responsible manner.

Thiel has been a major backer of Republican politicians, including former president Donald Trump. He was also a vocal advocate of cryptocurrencies, telling a conference in Miami last year that digital currencies could replace fiat money. Around the same time, Founders Fund sold out of most of its cryptocurrency holdings.

Written by: George Hammond

© Financial Times