The Big Save

US Government Step in to Rescue SVB Depositors, Altman and Khosla Demonstrate Venture Spirit, and Naspers Waves Goodbye to SA Startups.

Author

Adam from VC Brags
March 13, 2023

Welcome Shareholders,

In this daily edition of the Brags Newsletter, we'll cover how the US Government is taking emergency measures to save depositors at Silicon Valley Bank, How Founders & VCs stepped up to support startups during the SVB crisis, and Naspers Foundry going dark on SA Startups.

So sit back, grab a snack, and enjoy!

Venture Today 👏

  • US Banking Regulators devised a plan on Sunday to backstop depositors of Silicon Valley Bank in a move to reassure customers and prevent additional bank runs.

Officials said that depositors of both Silicon Valley Bank and Signature Bank in New York (the bank collapsed on Sunday), would be made whole to prevent a panic across the banking system. The Federal Reserve is introducing a Bank Term Funding Program to protect institutions affected by SVB's market instability, offering loans up to one year to eligible organizations that pledge high-quality collateral. The Treasury Department is backing the program with up to $25 billion from its Exchange Stabilization Fund to cover any potential losses.

The emergency measures from the Government are crucial since all banking institutions hold in total an estimated $600 billion in unrealized losses on held-to-maturity Treasury and mortgage-backed securities. The drastic step taken by the US government comes just two days after SVB, long considered a financing hub for tech startups, found a shortfall on its books, triggering a run on its deposits, bringing back memories of when Investment Bank Lehman Brothers similarly collapsed in 2008 over the weekend.

  • OpenAI CEO Sam Altman and venture capitalist Vinod Khosla were two prominent figures who were offering personal capital and loans to help startups over the weekend before the Government made any plans to compensate SVB depositors.

A few startups (including Rad AI) confirmed that Altman, who is also the former CEO of Y Combinator, sent a six-figure emergency sum over the weekend so that they could meet payroll, requesting that it only be paid back once they were able to. Venture Capitalist Khosla also said that he would offer personal loans at borrowing cost to portfolio companies.

On Friday, fintech startup Brex announced its emergency line of credit for startups, leading to over 1,000 companies making requests totaling more than $1.5 billion over the weekend, according to co-CEO Henrique Dubugras.

  • Africa's most valuable tech company, Naspers, has closed down its R1.4 billion (≈$100 million) venture capital fund, Naspers Foundry, focused on South Africa.

Naspers will continue to invest in its nine portfolio companies, including Planet42, SweepSouth, Aerobotics, and WhereIsMyTransport, through its international Prosus Ventures arm. The company's South-Africa focused venture fund will wind down, with the company no longer having a dedicated team for making local investments.

Launched in 2019, Naspers Foundry supported South African startups in Series A, and B stages focused on internet businesses like food, payments, or classifieds, as well as digital ventures addressing societal needs. Despite blaming the global downturn for the fund's closure, the firm faced challenges from South Africa's Competition Commission, which prevented Naspers Foundry from making certain deals due to concerns about market dominance.

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