Per Bloomberg Intelligence, the Silicon Valley Bank debacle could potentially lower valuations of VC-backed startups by 25% to 30%.
The markdowns could possibly wipe out nearly $500B in valuation across the $2T venture capital industry. Bloomberg analyst Gaurav Patankar reckons that SVB's fallout will cause an increase in valuation scrutiny and disclosure requirements for portfolio startups.
Patankar believes that despite VCs and PEs' best efforts to conceal the true market value of their portfolio startups by holding onto assets longer or injecting more capital, pension firms' investments in alternative assets will serve as the catalyst for the valuation correction and increased disclosure requirements.
- He adds, "There are enough zombie companies with frothy valuations that need restructuring, price discovery, and of course re-tooling of their business models to a world of tighter credit, subdued revenue, and higher rates."
Meanwhile, First Citizens BancShares acquired SVB for $500M in stock from the FDIC.
- First Citizens will take up $56B of deposits, $72B of loans, and $110B of assets of the bank.
