Just not of the people many people thought it was. Last week, some asshole with a blog noted this about the Silicon Valley Bank takeover:

What I can’t wrap my head around is how stupid the venture capitalists who backed these startups were. I don’t expect someone running a small startup to realize there are ways to protect cash in excess of the $250,000 cap… But I do expect the guy who gave you millions–his millions–to make damn sure the money doesn’t go missing. That they did not want to pay for (or know about) methods–pretty routine ones–to protect bank deposits over the $250,000 cap speaks to a lack of basic competency.

Yes, they might have been coders once upon a time, they have surfboards in their offices, and so on. But now they’re just investors, nothing more. And they couldn’t protect the fucking cash.

If one of their startup founders was taking home the cash each night in a giant garbage bag for safekeeping, I would like to think they would have a discussion with said founder. Leaving aside the question of whether the bailouts should have happened–which ultimately a question of who is getting bailed out (hint: it’s the investors, not the founders)–the investors were reckless and stupid. Definitely not masters of the universe.

Well, Daniel Davies, who is a professional in this area, has more (boldface mine):

First of all, on a very basic level, VC holds billions of dollars in capital. They could have just sat tight and then picked up some of SVB’s capital issues so that their bank didn’t fail. That’s not uncommon in other situations. Swiss banks get bought by their highest-net-worth clients and then sourced among their friends temporarily. From what I’ve gathered, the VCs didn’t want to do anything that would make them qualify as a bank holding company because once you do that you’re under a different set of regulations and it becomes very difficult to get out of them.

Some suggest that the cash wasn’t on hand and it would be a hassle to raise it. Here’s the thing though, those are exactly the problems equity capital people are paid billions of dollars each year to solve. If I had a career making $5 million a year organizing these funds, you should have a risk strategy or at least be able to figure it out over the course of a weekend.

If a bunch of hedge funds with $10 to $100 billion under management suddenly fell victim to a cyber attack, and it turned out that none of them had employed a CTO [chief technology officer] or used widely available firewall software, would everyone suddenly be given cybersecurity insurance provided by taxpayers? That’s hard to imagine.

Here’s another scenario we should consider: Let’s say I’m one of these venture capitalists and I’ve given all these startups millions and told them to go to SVB. If a company loses $10 million but I really believe in the company, you write another check. It’s not pleasant but that’s what it is and that’s how it could have played out when payroll came due on Monday.

The venture capitalists basically used the threat of thousands of startups shuttering as a political human shield to get a bailout.

Because let’s be clear, the vast majority of deposits came from venture capitalists and the majority of the losses were on venture capitalists. The FDIC bailout is for the venture capitalists even though that’s obfuscated because it’s split between all these many companies.

A lot of people got played here.