Silicon Valley Bank (SVB), which collapsed in a bank run last week before it was taken over by federal regulators, managed portions of a multibillion dollar collection of funds at a venture firm where former Democratic Vice President Al Gore is an adviser and senior partner, according to a report by a due diligence watchdog.
SVB had custody of a portion of 14 funds managed by Kleiner Perkins, a major venture capital firm where Gore is employed, which together totalled $2.68 billion, although the value actually held at SVB when it collapsed is unknown, according to a report by Castle Hall Diligence. High-level partners at Kleiner Perkins banked with SVB, and the bank provided loans to many Kleiner-affiliated startups, according to the New York Times, citing two sources familiar with the matter. (RELATED: Shocker: One Of America’s Most Politically Connected Banks Is Due For A Huge Profit Off Other Bank’s Failure)
The bank also provided a $500,000 loan to Kleiner Perkins for the venture firm to build a bridge between its two office buildings, located just 43 feet from SVB’s own offices, according to the NYT. At a January event about the wine industry, SVB hosted speakers from Wine.com, a firm that Kleiner Perkins had formerly invested in.
Kleiner Perkins has invested in a variety of tech, climate and healthcare firms, ranging from Google and Spotify to plant-based meat substitute maker Beyond Meat and battery firm Amprius, according to the firm’s website. Gore also serves as the chairman and founding partner of Generation Investment Management, a firm that considers itself “integral” to the development of “sustainable and environmental, social and governance (ESG) investing,” according to its website.
In total, SBV was the custodian of a portion of more 5,994 funds managed by 1,074 private equity and venture capital firms, according to Fortune. Together, the funds represent roughly $863 billion in assets, although the total value stored at SVB is unknown since venture firms are merely obligated to report the names of banks where they store assets in funds, not the specific amount stored in each bank.
“This is really unique to have 6,000 funds with relatively small banks—that’s something that doesn’t exist for bonds, hedge funds or real estate,” Chris Addy, founder and CEO of Castle Hall Diligence, told Fortune. “I think it’s going to cause a lot of questions just as to how that concentration emerged.”
SVB grew its clientele in part by offering low interest-rate mortgages to start-up founders that traditional banks were unwilling to engage with, including those with ties to Kleiner Perkins, according to the NYT. These individuals, who may have held assets worth millions, often had limited cash on hand.
“There were a lot of ways in which Silicon Valley Bank was intertwined in the lives of Silicon Valley people that was unique,” Anat Admati, a Stanford finance professor, told the NYT. “The bank had relationships and made relationships with people across Silicon Valley. It was a point of congregation.”
SVB and Kleiner Perkins did not immediately respond to a Daily Caller News Foundation request for comment.
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