Business Case Studies & Business Publications

Phynix in the Ashes of SVB

Loutskina, Elena, ...

Case

Phynix in the Ashes of SVB

Loutskina, Elena; Sesia, Aldo

F-2086 | Published August 9, 2024 | 17 pages Case

Collection: Darden School of Business

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In March 2023, Silicon Valley Bank (SVB), a lender to tech industry companies in Silicon Valley for more than 40 years, suddenly imploded and ceased to exist. Within roughly four hours on March 10, $42 billion (25%) of SVB's deposits evaporated from the bank’s balance sheet due to clients making a run on the bank, rapidly withdrawing the funds they held at SVB. Although the fallout for the private equity (PE) and venture capital (VC) industries was not as bad as initially feared, SVB's fall still left many PE and VC funds and portfolio companies wondering where to bank. Now, Carlos Martinez—the managing partner at Phynix Capital Management (Phynix), a successful lower-middle-market private equity (PE) firm—had an important decision to make about Phynix’s banking relationships. The firm had relied on SVB's white-glove banking services and had counted the bank a reliable partner since Phynix's inception in 2003. But with SVB gone and no other similar institution to jump to, Martinez must make a decision about Phynix's banking future.