Miguel Galvez

Co-Founder of @NBDnano (acquired) Tough-tech entrepreneur, investor in 20+ companies, and board member to several high growth startups.

[Andrew McCalip @andrewmccalip]

Meissner effect or bust: Day 8.5

We made the rocks

[Bill Ackman @BillAckman]

There are a few times in life when you read a new book and realize that your life will be transformed if you follow its teachings. @PeterAttiaMD’s Outlive is such a book. It can save, or at a minimum massively improve, your life. I can’t imagine a better investment for 28 bucks.

[Aaron Levie @levie]

The government crushed it:

“Depositors will have access to all of their money starting Monday, March 13. No losses associated with the resolution of Silicon Valley Bank will be borne by the taxpayer.”

[Dan Primack @danprimack]

What to know:

1/ Fed is backstopping all SVB depositors. Everyone gets access to everything tomorrow. Crisis averted.

2/ There does not yet appear to be a deal to sell any part of SVB.

[Miguel Galvez @galvezmi]

SVB has been an amazing partner to my businesses and to me personally (I do my private banking and mortgage with them). Let's hope they pull out of this and without contagion to smaller smaller banks. This week could be the most important week of finance since 2008. Or nothing.

[samir kaji @Samirkaji]

Crazy day. After 22 years between SVB and FRB, I'm still at shock. My wife also works at SVB right now.

The news today was huge, and here is what I've pieced together across 100's of conversations yesterday/today.

🧵

[Bill Ackman @BillAckman]

The gov’t has about 48 hours to fix a-soon-to-be-irreversible mistake. By allowing @SVB_Financial to fail without protecting all depositors, the world has woken up to what an uninsured deposit is — an unsecured illiquid claim on a failed bank. Absent @jpmorgan @citi or @BankofAmerica acquiring SVB before the open on Monday, a prospect I believe to be unlikely, or the gov’t guaranteeing all of SVB’s deposits, the giant sucking sound you will hear will be the withdrawal of substantially all uninsured deposits from all but the ‘systemically important banks’ (SIBs). These funds will be transferred to the SIBs, US Treasury (UST) money market funds and short-term UST. There is already pressure to transfer cash to short-term UST and UST money market accounts due to the substantially higher yields available on risk-free UST vs. bank deposits. These withdrawals will drain liquidity from community, regional and other banks and begin the destruction of these important institutions. The increased demand for short-term UST will drive short rates lower complicating the @federalreserve’s efforts to raise rates to slow the economy. Already thousands of the fastest growing, most innovative venture-backed companies in the U.S. will begin to fail to make payroll next week. Had the gov’t stepped in on Friday to guarantee SVB’s deposits (in exchange for penny warrants which would have wiped out the substantial majority of its equity value) this could have been avoided and SVB’s 40-year franchise value could have been preserved and transferred to a new owner in exchange for an equity injection. We would have been open to participating. This approach would have minimized the risk of any gov’t losses, and created the potential for substantial profits from the rescue. Instead, I think it is now unlikely any buyer will emerge to acquire the failed bank. The gov’t’s approach has guaranteed that more risk will be concentrated in the SIBs at the expense of other banks, which itself creates more systemic risk. For those who make the case that depositors be damned as it would create moral hazard to save them, consider the feasibility of a world where each depositor must do their own credit assessment of the bank they choose to bank with. I am a pretty sophisticated financial analyst and I find most banks to be a black box despite the 1,000s of pages of @SECGov filings available on each bank. SVB’s senior management made a basic mistake. They invested short-term deposits in longer-term, fixed-rate assets. Thereafter short-term rates went up and a bank run ensued. Senior management screwed up and they should lose their jobs. The @FDICgov and OCC also screwed up. It is their job to monitor our banking system for risk and SVB should have been high on their watch list with more than $200B of assets and $170B of deposits from business borrowers in effectively the same industry. The FDIC’s and OCC’s failure to do their jobs should not be allowed to cause the destruction of 1,000s of our nation’s highest potential and highest growth businesses (and the resulting losses of 10s of 1,000s of jobs for some of our most talented younger generation) while also permanently impairing our community and regional banks’ access to low-cost deposits. This administration is particularly opposed to concentrations of power. Ironically, its approach to SVB’s failure guarantees duopolistic banking risk concentration in a handful of SIBs. My back-of-the envelope review of SVB’s balance sheet suggests that even in a liquidation, depositors should eventually get back about 98% of their deposits, but eventually is too long when you have payroll to meet next week. So even without assigning any franchise value to SVB, the cost of a gov’t guarantee of SVB deposits would be minimal. On the other hand, the unintended consequences of the gov’t’s failure to guarantee SVB deposits are vast and profound and need to be considered and addressed before Monday. Otherwise, watch out below.

[stockgeek 📈 @stockgeekTV]

Everyone is freaking out that 97% of $SIVB depositors are above the $250K FDIC insurance limit

However, $SIVB has $120B of cash + securities that can be quickly sold by FDIC to cover 2/3 of deposits

$73B of loan assets will eventually be sold to recover the other 1/3 (~$50B)

[Miguel Galvez @galvezmi]

@billclerico *They call on all of their debt

[Miguel Galvez @galvezmi]

@billclerico Wow didn't think of this. Very real possibility the call of their debt.

[Raoul Pal @RaoulGMI]

Big Thought Alert...

I am starting to think that the AI moment we are seeing, and in particular Chat GPT, is one of the biggest deflationary shocks in all history..

...Akin to China joining the WTO (actually bigger as low wages were not persistent in China).

Why?

1/

[Miguel Galvez @galvezmi]

@AdHocWalletBF link has expired- can you send a new one out?

[Miguel Galvez @galvezmi]

@stable_auto @congruentvc @ironspringVC congrats @RohanSPuri !

[Bilal Zuberi // Red Glass Ventures @bznotes]

RIP good times.

It’s time to build real companies, with real technologies, to solve real problems.

With real revenues, realistic spend levels, and focused fundraises from value-add investors.

[Miguel Galvez @galvezmi]

@bznotes This sucks. They should limit SBIRs to less than 10 per company unless they have proven they have commercialized past work to the commercial or DoD sectors...

[Keith Rabois @rabois]

This may be the best tweet ever.

[Miguel Galvez @galvezmi]

"I need ammunition, not a ride" is one of the most badass lines I've ever heard

[Miguel Galvez @galvezmi]

We woke up to a new world today. Prayers for the Ukrainians.

[Micah Rosenbloom @micahjay1]

/9

Humble exits that might have given founders a few million dollars after nearly a decade of hard work might not be available in the future, given the starting valuations that are common at this moment in time.

Please reread this tweet.

[Miguel Galvez @galvezmi]

@HealthcareNinj1 great read. Best diligence overview i've read on the company. Been long since $1.6