SVB Financial Files for Bankruptcy

this is playing out in the market. Silvia Jablonsky of Defiance CTS joins us with her take on bitcoin, which is flirting with its biggest weekly gain in almost two years, plus how the crisis is playing out in the c suite. We speak with the CEOs of Mercury of Rippling for their take, and we get the venture capital outlook for the co founder of Cozon Adventures. All that so much more coming up. Let's get first to an extraordinary week

on the markets that finishes with an extraordinary day. We're off by one percent on the NASTAC, but remember this index is actually higher to the tune of four percent on the week as actually the big tech still outperforms when we're worried about small tech. And of course for the banks, the KBW bank condects another sink by fifteen percent on the week. We're down by five percent on the day. We are down by the most on the month.

Since March of twenty twenty twenty eight percent of value of the KBW bank connects has been extinguished two year yields. We fly to safety once again. We're off by twenty four basis points. This as we see inflation expectations from the consumer from the humish data coming down. Let's move it on. Let's look at what's happening. What was once inflation hedge at the moment, is it some sort of

well safety portrayed at the moment as well? Up twenty three percent in the last five days for bitcoin age extraordinary. Dig into some of the micro moves, well, the mentality the market's really interesting. You can name like Microsoft up half a percentage point, where most names on the NASDAC

one hundred of down. There's a debate whether that's a move to safety or if it's a feel good from all their AI announcements this week and video pushing higher one percent, Morgan Stanley calling this a mega trend in AI and video, of course, has been talked about for a few days now as one of the main beneficiaries. Interesting to look at the streamers. Disney down nine tenths

one percent, Netflix down pretty significantly. Third party data out Friday showed that actually Disney's ad supported tier of Disney Plus is outperforming the ad supported tiers of some of its piers, not translating through to the stock. First Republic, We've had holts, we've had volatility. All told, this stock is down seventy percent over a five day basis. It's worst week on record, the stock trading at its lowest level since twenty eleven. We are still waiting for definitive

answers in this banking sector. What we know is that Biden's paying very close attention to this carrot, as we all are. And let's just talk a little bit about the step by step take with SVB, the company filing for Chapter eleven bankruptcy earlier today, with us now to break it all down as she has done every single day of the week and the weekend before. Bloomberg's Chenali bask And Sali. What does it mean for the parent company to follow a bankruptcy and who's involved? There are

a lot of questions to be considered here. I've been following this closely. I've been asking all week why has there not been a bankruptcy filing? Now? What you'll have as creditors who will want a certain amount of money back number one. Number two, there are certain assets that will not be included a here, certain banking assets and including some of the assets tied to his venture portfolio

year and its securities business as well. What I've been hearing throughout the entire week was the difficulty guys, it has been to sell assets to recoup value here. Now this is under the overseeing of a bankruptcy judge as well. The hohope here is that there is enough money that can be redeemed here by strategic options for some of these assets. I mean ed what's interesting, of course, Silicon Valley Bank, which is previously under SVB Financial, Well, it's

still got a bridge bank, right, and it's got new executives. Yes, We've got to be really clear, it's financial that did the Chapter thirty SVB the Bridge Bank right, it continues to be a California chartered bank under the receiver ship of the FDIC, so it cannot fall into bankruptcy. That said Sinali. Astonishing reporting on the Bloomberg terminal that one year ago the San Francisco FED brought in a new assessment team quickly flagged issues at that bank and asked

management to act on it. What have we reported? This is a very complicated thing, and there's a lot of questions being asked, not just about how they lobbied for easiness when it came to how they operated. There's a lot of questions here about whether the system across the United States is not equal to begin with. One example that you pointed out, Frankly Head is that that the rollback and rules really helped catapult the expansion here of

Silicon Valley Bank in the most recent years. I would also say that when it comes to the way they lent to businesses, they had different rules and some of the largest banks that are occ Charter, that is the Office of the Control of Currency Charter, they had really strict rules around leverage lending and lending to unprofitable venture backed companies, which is why now when you're seeing these firms trying to buy in circle assets around that venture

backed loan portfolio. Even private equity in private capital firms are saying this is a no go because it's not how they were used to lending. So it's a complicated equation. It doesn't mean things won't get sold. People are definitely looking at the pieces of the pie in the assets here. But to your point here regulation the lack thereof the process and kind of pushing for lighter regulations, that won't just be looked at for this firm, guys, it will be looked at for a lot of the smaller firms

that have done the exact same thing. Well, we talk about seven days since Silicon Valley Bank failed Caroline, and I think the question we're going to answer out this program is about accountability. In other words, who is responsible for what happened to We actually do not have a clear answer on that yet and it's something Shannali that Joe Biden, President Joe Biden is looking into accountability. We still have yet ships to fall with other regional lenders.

We certainly do. I think we have to look at that drop off in the stock price as well as the easing of the bonds as well, when you look at First Republic, just how much in value this company has lost this week a loan. It's now less than a five billion dollar company by market value. We look at what has to then at SVB, we've been talking about this. My sources were saying, this is a bank you could have maybe bought on Thursday night before that

forty billion, forty two billion dollars deposit flight. But things deteriorated quickly. They're trying not to make this happen for First Republic. First Republic still has a lot of amazing assets. By the way, for the California community. You talk to banks across the country. First Republic really dove in in a way that a lot of big banks were not on top of as quickly as they were when it came to catering to the elite of California certainly the

country big wealth manager, big mortgage lender for example. And so a lot of questions about the future First Republic as well, both for the California community as well as the rest of the country, and whether this is a bank that can be sold ultimately, and that is something that market is watching for very closely. Bloomberg Snali Basset. You have been everywhere this week. Thank you for your reporting.

Happy Friday. I want to stick with the markets and the market impact of what's playing out across asset and bringing Sylvia Jablonsky Defiance ETFs CEO and CIO and Sylvia. Caroline made a really good point at the top of the show. You look at the NAZAC one hundred, for example, headed for its best weeks since November, despite sort of the broad risk off sentiment that we've seen throughout this week driven by headlines. Yeah, great to be here, and yes, it was a great point made at the top of

the show. And actually it's something that I've been talking about and thinking about for weeks prior to the banking crisis here. So in my mind, even if you take away the banking crisis, some of the top fang companies out there are the top tech names, especially are on the precipice of innovation with chat GYBT. We all sort of know AI and how we expect that to play out. So there's a good reason to invest for that reason alone. But then on top of it, they are battered last year,

but look where they are. They still sit with very strong balance sheet and you have a macro you know overhang here of a hawkish FED that is now shifting regardless of the banking crisis. So now throw an SVB. You have some you know, deflationary pressures. You have a FED that is likely to think about pausing and sort of stopping on the rates. And who does that benefit that if it's you know, tech companies, their costs to borrow becomes cheaper, they can do the RD and just

to jump in on the FED. Do you think that they won't be hiking the will come next week? Oh? I think that the FEDER will likely you know, I don't know what the FEDER will do, but in my opinion, I think, you know, twenty five pips is likely to be on the table with a long explanation that is not as hawkish around the idea that they're going to pause and and you know, taking the environ and see

what happens. Because I think there's this massive need now to reinstall confidence in the banking system and a shock like that and a scare like that actually does have an impact on consumers and investors and makes investors want to sit on the sideline, makes consumers not want to spend because they're worried about that recession, you know, and so on. So I do think that beyond this next rate hike, it's going to be a much different story

than it was a month ago. So when you're looking at allocating money, have you been this week and into wold? You know? I have not yesterday when the market was rallying. But I you know, I look at the long term as an investor, and the things that I like in the long term are that Fourth Industrial Revolution trade, right, but with the quantum of machine learning and the AI,

I continue to allocate there. So when we have these pullbacks days like today's names, I like to look at a basket of stocks that represents those teams, whether it's semi conductors, the big tech companies, and you know, in my mind, I'm going to hold those for the next three to five years and that'll pay off. And then I diversify too, right. I like defensive portfolios. I like alternative energy things like hydrogen, you know, the way of the future of how we'll sort of power our cars

at homes and things like that. That's a growing trend and all of these names are battered along with the rest of the market. This week. So in general, though, if you're an investor, you know, I think even index exposures to pick up at these levels when we get pullbacks like today. When I think of defiance, of course, ed, I think of the ETFs that are related to crypto and not just an announced that a boy, what a

week for crypto. Well, I guess, Sylvia. My question would be that there is this high degree of bullishness around crypto or digital assets, right yet the world around that industry, the startups, the companies are under quite severe dress. How do you square that? Yeah, so you know, the going back to you know, Caroline, I think we square it by creating a short fund. So we're actually sort of worried about some of that risk, and we think that a lot of investors in the short term will be bearish.

But you know that, Beans said, I think it depends on what type of crypto we're talking about. So if you look at bitcoin, you know, bitcoin is almost like the SMP five hundred of of of crypto, right It's it's sort of it's the least risky of crypto assets. And I think that with the bank blow up, a lot of investors have viewed that as a good alternative to not have exposure essentially to both government and bank failures and things like that. So it's essentially catching a bid.

But I think if you look at the overall crypto economy, it's the same situation as you have with you know, high, highly leveraged growth companies that are you know, not the friends necessarily, but they're highly impacted by rates, They're highly impacted by inflation, They're very volatile, and when you have to get a bank collapse and you have an uncertain macro backdrop of recession or not, you're unlikely have investors piling into those types of names. In my opinion, I

think they'll stick with bitcoin. You know, maybe they'll look at ethereum, but but I think, you know, the smaller names are probably not going to catch a bid. See names that I show you the top of the show where Nvidio and Microsoft and artificial intelligence. Despite all of the chaos and the banking sector is continued to be a theme. At least that's what cell side is are writing about. How are you positioning to kind of take

advantage of momentum in that space. Yeah, at our company, they're actually to the top holdings in our in our quantum basket, which is the machine learning and AI trade there. And I think what we're looking for is is just the build out. You know, there's an expected cager of about thirty seven percent in the next five years strictly

off of AI. If you think about how it's going to impact every sector from you know, retail, Amazon being able to target ads and you know, kind of put things package your basket more accurately, healthcare, connecting doctors, you know, robots, research, all of these types of things that we've we've talked about before. Defense, you know, more precise targeting. All of

this depends on AI. We know that that's growing out and you know, Microsoft just really put themselves in the front of the pack there in terms of our d an investment in the space. Another discussion of a compound annual growth rate. We love at Sylvia Tavlovsky, CEO and

CIO of Defiancyts. We wish you were a RESTful weekend. Yeah, I think we all need one carros Staying in the world of crypto, though, a clash involving disgruntled coin based customers will give the US Supreme Court its first taste of the world of cryptocurrencies, foreshadowing future cases that could help define the industry. Next week, justices will hear arguments stemming from coin bases efforts to push two lawsuits into arbitration, so a procedural battle rather than a crypto specific matter

coin based. Once court proceeding stopped when an appeal is filed seeking to compel arbitration. The joint case comes as high stakes fights involving the likes of Ripple and Grayscale work their way toward the court, shaping the rights of customers and companies alike in the fledgling industry. We're going to keep across that in the coming weeks. Let's say the thadhand stepped up today in Silicon valid bank Field and like a whole bunch of startups lost their venture dialers.

That would that would have been and that would have been an event that I think would have been way worse than oh one like that would have been catastrophic. That was a long time venture capitalist. Bill Gurley was some of his thoughts on the banking crisis in its ramifications.

It's been seven days since Silicon Valley Banks collapsed, the biggest US lender to fail in more than a decade, many tech startups and venture catalysts, the same industries by the way that fueled spob's rise, scrambled to pull their money out, and amid the exodus, tech companies diversified away from one single bank to a mix top tier names but also fintech startups that technically aren't banks at all. One of those Mercury, and in the past week, the

startup has onboarded thousands of new customers. Mercury's co founder and CEO, Immadachan joins us, Now, you are not a bank, Yes, your banking services are provided by Choice Financial and Evolved Bank. So explain how you've been able to benefit this week from SBB situation. Yeah, so you know, you can go to Mercury dot com and get a bank account. We work with two partner banks, Choice and Evolve, but we've

provide a full kind of suite of banking services. You can go check account wires, debit card, credit card, venture debt. We've been you know, we launched about four years ago. We've been kind of successfully doing this. We have a four hundred thousand businesses I use Mercury. It is nine seventeen local time on Friday, twelve seventeen in New York at this moment, give me a dollar value for the

business that you've brought in this week. Oh, it's been above two billions so far, and then that equates to deposits or yes, and deposits. Okay, you've explained of course versuscinctly there your business and the partner banks that in particular you lend a pond or use. I'm just interested is to now insurance. Everyone must be coming too, saying am I FDIC insured? And when you go to the website, it shows that actually you can be insured up to

five million in terms of deposits. Understand for our audience, how this is protected in particular? Yeah, so yeah, we're not a bank, so we don't take these deposits and lend them out. We work with our partner banks and they have a network of sweep banks underneath them. So in order to provide five million an FDIC insurance that split between twenty banks. You know what we heard Actually last week we had about a million dollars in FDIC insurance.

So we've increased it by five x, and that's obviously twenty x bigger than what you would get at one bank. Yeah, you know, we heard people are really concerned about, you know, what's happening and is their money safe at Mercury, And obviously I can say it's safe. Providing that extra insurance

with FDIC insurance on their deposits helps a lot. I think the main point you and I have discussed a week right is that diversifying a was something no one had thought about early enough that there were benefits to going to traditional banks and some startups that offer different things to the traditional banks. And to that point, you are offering actually access to money market funds, but they're

not your money market funds. It's Vanguards for example. You're offering, therefore, to split up people's deposits and spread them across well and a range of other lenders. Why come to a middleman, Why come to a Mercury when you're worried about the security of all these vendors. Yeah, so Mercury there's a software provider. I mean, at the end of the day, if you're buying a Vanguard fund, you can obviously go to Vanguard, or you can go to e Trade, or

you can come to Mercury to do it. We just make it very simple, you know, these business owners have a lot on their mind. They just want to build their business. They don't want to be thinking about where's my money. We can do things like automatically set up rules so when you're when you need more operations normal account of money, it automatically sweeps between the Vanguard fund to your normal operational fund. So we make it very simple and easy, and Mercury is actually not in the

money flow at all. We're not a custodian, we're not a bank. We're an enabled to do these companies and do the kind of financial institutions behind the scene. You're backed by CRV andresen Qua two. You raised at a one point six billion dollar valuation twenty twenty one. Yeah you're raising now. No, we're profitable. We're making money every month, so we're able want to write you a check? How we're knocking on that. I've had lots of VC's reach out this week, but you know, it's just been so busy.

I'm like, this is yeah, this is not the right time to trying to talk to me. Emad. We thank you for coming on for being so clear with us. All I'm making time amid well the flood of interest of Mercury. Thank you. Coming up, well, we'll turn to artificial intelligence that is buid surges after brokerages tested and approved. The companies just unveiled CHATCHBT like service more next and talking tech and sticking with artificial intelligence. We're watching in video.

Shares just upgraded to overweight from equal wait at Morgan Stanley Analysts, saying that the development of generational AI, it's too much of a mega trend to get distracted by tactical concerns. We're going to currently up one percent, offer as high as other day from New York, from San Francisco, the subringberg on a market neutral basis, the quality factors at a new high. So the market perceives these companies, the Apples and the Microsofts of worlds is quality and

safe haven. And that's kind of what kept the smp aflow. It's that pushbat the financials getting crushed, but then the tech pawn it. Once the markets start thinking and feeling that on even Apple's that's safe, then the s and people could actually roll over. Kept the mats that higher too. John Colivers, their head of technical strategy at Macro Risk Advisors.

Now it's time for talking tech by DO surging one than fourteen percent to day after brokerages including Citigroup tested the company's just unveiled chatboart service granted it that their preliminary approval by Do's link reverse that six percent loss. On Thursday, after the founder you see here, Robin Lee, debut the new artificial intelligent technology via a recorded video

speaking of AI. Data analytics firm pre State II opened in Aberdabi G forty two drew orders worth twenty five point eight billion IS four hundred ninety six million initial share offering and then later signed a strong demand for Middle Eastern offerings, and Microsoft handed in formal antitrust commitments to the EU watch dogs. Of course, they're probing the

sixty nine billion dollar planned to buy Activision Bizzards. This action now puts the onus on Britain's Merger watchdog to deliver a potentially decisive ruling on the deal and pushes the EU's final deadline from March sixteenth to May twenty. Second, and the CEO of Amazon's Twitch game streaming platform is resigning. Emmett Shier will be replaced by Twitch president Dan Clancy.

The departure marks the latest executive turnover over at Amazon, said Sidury's Scher, who has been at Twitch since it's very origins, said he's leaving to spend more time with his son d Welcome back to Bloomberg Technology. I'm Ed Ludlow in San Francisco. It's nine thirty am here on the West coast, but four thirty pm in London. European markets closing. This is the picture the stocks Europe six hundred down one point three percent, passing over economic data

and also jitters of course in the banking sector. Euro continuing to strengthen against the dollar one oh six seven on euro dollar up around six tenths of one percent. We've seen some fluctuations in the currency market over the course of the week because of course central bank policy being a key fact at UCB, giving us that half point hype, but not a lot of guidance for what's to come in the months and years ahead. And you know, the bond markets, we're seeing some kind of advancement continue.

German tenure burned off by sixteen basis points two point one two percent. The UK two year yield at the short end we're at three point two percent, down sixteen basis points as well. Inflation a big focus right now when it comes to the United Kingdom. Change the boards, and let's look over the course of the week, because the stock six hundred Europe in the equity space having its worst week since September, really feeling the impacts of

that banking situation. Compare that with the picture here in the United States Caroline, and then as that one hundred. Yeah, certainly the ripple effects far and wide. Let's talk about how difficult the banking crisis has made it to raise capital for tech startups. Here's what Cleo Capital's co founder Sarah Kunst had to say about it earlier this week.

It's going to be a hard quarter to pitch in, you know, getting net new capit a lot of vcs who don't already have an obligation to the money they've put with you is going to be harder than ever. And it doesn't mean it's totally dried up, and there will be tons of people starting great new companies, but this is going to be a much different fundraising environment than even a few months ago. For some the funding

is still open. Let's bringing Parker Conrad for his take on all of the CEO Payroll service provider, Rippling, it's just raised five hundred million dollars in three days alone. Parker, this is all in many ways because of what occurred with Silicon Valley Bank. Can you talk us through the money that you've managed to raise and why. Yes. Rippling is,

among other things, a payroll company. We make software for businesses to manage everything related to employees, so payroll, hr IT, finance, expense, reimbursements, and we think we can cut a lot of the administrative work involved in running those things out by doing it all in one place. And the way payroll works is companies send us money a few days ahead of pay day and then we send it along to their employees. And so when Silicon Valley Bank failed, they were previously

the rails for our payroll service. We had to move in just a few hours over to JP Morgan Chase. But we also we knew on Friday when the bank failed there were fifty thousand people that we needed to make sure got paid whose companies had already sent us money. And so what we did is we actually took about one hundred and thirty million dollars of our own capital and sent it out the door to make sure that everybody got their paycheck on Friday and moved heaven and

earth to do that. My colleague Katie Reef has just texted me, she's been writing about your situation this morning. Given now that the SVB situation is kind of more resolved, what are you going to do with that five hundred million? Yeah, So we raised the money to make sure that we'd be able even if the fdi C did nothing, that we'd be able to backstop our client funds. But as it turns out, you know, depositors were protected. So we now Ripley is incredibly well capitalized. We have, you know,

almost a billion dollars on our balance sheet. What would you done if the deposits were not ensured. We wanted to make sure that any company that had sent us money we were going to get their employees paid. And so that was why we wanted to make sure we had this as a backup plan to a backup plan to a backup plan. Carroy, this is an amazing conversation because it's a snapshot of what happened in the moment.

We're hearing so many founders sort of pretty dire about the long term impacts of SVV and being able to raise funds, and yet you have a company here that did it in three days. And also you luckily already had a banking provider other than SVB, which JP Morgan. But we went to our own audience said, how hard is it as a founder, as a fund even to diversify your banks? It's pretty hard. It's complicated, said forty four percent. To that point, Parker, was it complicated for

you to rev up the JP Morgan? And also are you now more diversified even than that? It was? I mean, look, we have a number of different banking relationships, many different bank accounts across the world. But we always assumed that, you know, if something happened with SVB, which was the main rails for our payroll service, we'd have about two

weeks to get something up and running. And then what happened is when the bank failed, we only had about three and a half hours, and so we put a team of fifteen of the best engineers in the company on getting this up and running in that time frame time frame, and then a much larger team over the weekend and the days to come, really just making sure that everything was solid, everything was well grooved and sort of compressed that timeline to make sure that nothing was

interrupted for our clients. What's also so fascinating about your story, Parker, is the support of your venture capital supporters and in particular the realm that was led by Green Oaks Neil Meta. How important was it to have vcs on hand that would just rally the troops and give you money when

you needed it. We're you know, we're incredibly fortunate that there are a bunch of investors that have been really supportive of for a plane that we've known for a long time, and that have you know, even as the funding environment for late stage startups has gotten shaky, have always really wanted to find ways to own more of Rippling, and so we were able to put together on very short notice around you know, at a really fair price, you know, at an eleven point two five billion dollar valuation,

to get a bunch more capital in the business. And that's going to allow us, sort of, no matter what happens here, to focus on building the right products for our customers and growing our company. You kind of scrambled to take money from your balance sheet to help with payroll for others. Have you been made whole again after what's happened, and just reflecting on your customer base, is

there still problems out there. Oh, there's still problems out there for people trying to make payroll to move money around. We on Monday morning when SVB reopened, we got all of the customer funds out of SVB, and so we've been made completely whole for all of this. And there are problems still in the ecosystem, not for us. I mean, our systems are as solid as ever, just with a

different bank, with JP Morgan Chase. You know, I don't I don't know what's going to happen, you know, more broadly to the economy as a result of some of the shakiness in the banking sector. But we feel very good about about sort of our service we're billing. This five hundred million is an emergency fund raise, and I just wanted to ask how you felt about the terms of that raise. Were you happy? Was it a compromise? You know, I really disagree with the character characterization of

it as an emergency. I think it came together very quickly. But look, this was great capital on attractive terms. I mean, there aren't a lot of late stage startups that can raise dat amount of capital and a very short period of time at these valuations. I thought it was a great deal for the company, and I feel really good about it. I had lyone currently says emergency funds will

quickly maybe update that to new funds. Parker, Ultimately, what now do you expand do use a five hundred million to grow or can you in some way sort of give it back. We're going to focus. We We're going to use this money to sort of continue to invest in our product in research and development. Rippling has a really unusual commitment to r and D among SaaS tech companies. We spend an enormous amount in comparison to our revenue on developing new products, building new software, and we think

it's what makes us have the best product on the market. Puka, you're a fintech. You understand financial plumbing better than most. Do you think at this moment, this single point of failure that you had avoided by having other banks, does it mean you worry about a centralized financial system as it stands? I mean, look, we have different banking relationships with a number of different banks, and we continue to sort of diversify sort of the rails that we have

within the banking sector. I think in this case things worked out pretty well. We found out nine am on Friday, on the day that employees were supposed to get paid, that SVB was shut down and all of the funds that were supposed to arrive for payday on Friday were locked up, and we had three and a half hours to get things up and running with JP Morgan, and we were able to do that in three and a half hours and get people paid using our own capital.

So I look at it as sort of a real success story about our ability to make sure that you know, fifty thousand ordinary Americans that were paid through Rippling got paid last Friday. Rippling CEO Parker Comrade, thank you for sharing that story with Caroline and I. Now coming up, we're going to be joined by vinod Kosla to talk all things VC after what was, let's be honest, Caroline, a crazy week in the world of banking, but also

critically for technology. But look at the big tech benchmarks and maybe you'd be okay at thinking it wasn't as crazy as many felt. Four and a half percent higher on the NASTAC over the last five days, Big Tech still pretty being attractive this has been big time for a global VC roundup. Pt Teal has fifty million dollars or had fifty million dollars of his own money in Silicon Valley Bank when it went under, the Financial Times reports.

Teal says he did not draw down from his own account because he believed the bank would not fail, even though his founders fund had warned its portfolio companies to move money away from the tech focus lender. Malaysia's Patronus plans to expand its corporate vcarm by up to two hundred million as early as April, according to Router's citing sources. The branch will focus on making innovation and technology investments

across Asia Pacific, but the plan still being finalized. And finally, Walmarts is investing another two hundred million dollars in Indian

payments arm Phone pay. The investment was done at a pre money valuation of twelve billion dollars and it's part of an ongoing financing effort to raise a total of up to one billion dollars for the startup Caroline and Let's dig in to the flow of money at the moment, particularly at around the impact the current banking crisis were still consumed in how it's unfolded, who it's tainted, who it's managed to highlight their strength. The VC world, of course,

is one that we're going to focus on. The Silicon Valley Bank and others within the realm still being a concern. We've got a perfect voice, Finnode Cosal, a founder of Cosal Ventures with us, and I say we are not quite out the woods yet because First Republic Bank still struggling, still needing support from other banks in the system. Are we through the woods or do you think there's still more areas of concern for ode as we be for sure is completely safe today. It is ensured by the FDIC.

So in fact it's the best place to money put money because it's yielding more better interest rates than treasury and it's very very safe or just as safe in many ways. You over the course of the crisis, we can wanted to make it safe for your own portfolio companies. Look at a tweet we're tweeting out on March twelve talking about how you we're not using LP money and you're trying to help your companies basically using through loans basically depending on your own personal wealth and known that

has been reported. What made you decide to do this? Well, our companies needed help. We didn't want to and couldn't use LP money unless we were in ensuring great terms for our LPs. So we decide to use personal funds and at zero at the zero profit for us, but provide launch to our companies directly from our personal lenders to the companies. You know, I understand next week you will be one of many traveling to Washington, DC for a summit of sorts. What is it that you'll be

discussing with your industry peers and others. Well, next week's dinner that has been reported in various publications is about the influence of China in our technology race and economic war with China. So that's the topic of discussion. Have you the last week for some has been unthinkably hard.

For others, you know, they moved quickly. My question is has this derailed all of the things that your firm and the venture community were working on or does business now carry on as normal, the writing of checks, the focus on AI. I believe in a few months, three to six months, business will be back to normal. We of course encouraged our founders to leave everything but three months of money. Yeah, in Silicon Valley Bank have three months worth of cash outside, so we didn't want to

cause a bank run. Unfortunately, all our peers didn't do the same, so we saw the phenomena that we saw. At this point, FDIC money is safe. We're encouraging our founders to put money back in SVB, so we are in pretty good shape now. I think the interest in AI is driven by fundamentals, not by hype. I believe, though there is plenty of hype too. I'm pretty excited about where AI and some other technologies can lead us. Caroline, I think that the key unanswered question, and it may

take time, is who's accountable for what happened? Right we're still asking how this happened, but who let it happen? And no, do you have a perspective on that because some look at the VC community itself and say, kind of added fuel to the fire. Well, the VC community added purely to the fire by being a little irresponsible at the last minute. I believe what SPV was doing was running a hedge fund based on interest rates inside

a bank, and that was where the fourth lies. I believe, to the best of the information I have and that is such should be subject to regulation. Meanwhile, of course, the VC community comes together once again as you just articulated a dinner in Washington, thinking about relationships between the US and China. We think of the tiktoksy of course, going in front of Congress next week. What is the status between China and the US in terms of technology at the moment. Well, the dinner was set up long

before either the current or TikTok events. It's not really related to TikTok. It's related to the larger technological race we have for global technology power and hence economic power globally, and I think many of us feel the US and the Western world should in general investing technology and continue to be part of that winning strategy. I hope venture capital has been a big part of GDP growth in

the US. It's been a big part of innovation, and I hope it continues to be and it's critically important for the Western world. That happened. Then, TikTok and AI are two fields that seems to be increasingly at the center of the relationship between the United States and China.

Let's start with TikTok Bloomberg's reported that US officials are essentially saying to bite, dance, sell your interests in TikTok, or it will be and from the United States as a long time name in the world of technology in this country. What do you make of that? Well, they've kick in the position they have. I think in general TikTok has been used for spying on US citizens. So if that's true, and I don't have as much information as the administration does, then we clearly should penalize that

kind of behavior. As to the AI battle, it's a much more critical battle than the TikTok battle, and a general race for technological superiority and AI and hence all the areas of effects which in twenty twenty five years will be almost all of the kind of Then, Caroline and I have been talking a lot about artificial intelligence for weeks and months, and we joke that at the beginning of this week the air went out of the room for AI, but actually it started to creep back

in in recent days. Is that an area you're still focused on and will you be writing checks for AI related startups? Absolutely? Remember we invested in AI in Open AI five years ago. You were the first venture invested in open air, and the trend is long term and consistent, and I've been writing about it for the last ten years. AI It's implications for the economy, it's implications for cyber war, for war both defense and non defense uses. It's a

very important technology. I think small time perturbations like we saw and it was significant but still temporary perturbation will not affect the trend in AI and our investing interest in AI. It does want to take all open AI. GPT four really seemed to impress I do didn't initially and now it seems to be getting some applaud with its chat GPT like Ernie. Can there be space for many really additive startups in this space. I do believe

there'll be multiple platforms. Google has a very good play in Microsoft has embraced open the Eye, Bailou will of course with backing from the Chinese government's try and win. I do think there's room for more than one platform. I do think number of applications and TARPA these platforms will be very very large and very very robust area for investment for no Cosla fascinating to talk to you

through the ramifications of this last week. From a banking perspective, from an investing perspective, from an AI perspective, Fan ro Cosla Ventures, we thank you stay well. Look, aside from bank collapses, it's what everyone else has been talking about. The March Madness bracket, the manners that was of course for many, all the planning preparation going into brackets. It's been brown out. Number fifteen seed Princeton's shock victory against

the number two seeded Arizona. Now we at Bloomberg were like numbers, we like estimates, and we are some of the wealthiest to Wall Street on CEOs of technology companies to join this year's at Bloomberg brackets for a cause fundraiser. The entrance donate twenty thousand, and they select a charity that receives the funds if they're in the top three finisher.

And the men's and women's brackets the results nearly forty percent of the roughly fifty participants seemed to be choosing Alabama to win the men's NCAA basketball tournament in Alabama, which will play against Alburn on Saturday. Ed whining Wolf heard she came second last year. Yeah, look, I married into a Brewin's household and I don't really have a strong opinion on it either way, but I know our terminal audience does and the world is watching on social

It is all about university basketball, folks. Meanwhile, that does it for this edition of Blomberg Technology. Follow us on Twitter. Top of the hour. We're going to have a Twitter spaces ed big conversation coming up on the week. This is Bloomberg