Hercules Capital issues business update following Silicon Valley bank closure

Hercules Capital, a venture capital investment firm, issued an update on its business following the recent closure of Silicon Valley Bank, a major bank for VC investors.

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Officials at the Palo Alto, Calif.-based company said they are closely monitoring the situation and remain committed to supporting venture and institutionally backed growth-stage companies as they navigate this environment.

“Hercules has been a leader in the venture and growth stage lending market over the last 18 years where we have successfully committed over $16 billion of capital to venture and institutionally backed growth companies,” said Scott Bluestein, CEO and chief investment officer of Hercules. “We are committed to working closely with our portfolio companies and other companies in our ecosystem that are being impacted in a variety of ways by the closure of SVB. The work that we have done over the last several years to expand and diversify our platform and team, enhance our liquidity, and strengthen our balance sheet has put us in the unique position of being able to play a leading role in working with the many companies that have lending and banking relationships with SVB.”

As an initial step, Bluestein said the company has earmarked up to $50 million of capital to provide select companies in its ecosystem with secured short-term financing to meet payroll and other related obligations.

“Hercules has enjoyed a competitive and collaborative relationship with SVB throughout our own 18-year history, and we have partnered with them on a variety of lending transactions over the years. We do not, however, hold any cash or cash equivalents or have any direct banking or operational relationship with SVB, and we do not expect any direct impact on our day-to-day operations as a result of SVB’s closure. By contrast, we continue to experience ample liquidity and capital availability, a strong balance sheet, and diversified portfolio positioning. From this position of strength, we stand ready and willing to help the venture and growth-stage community,” Bluestein continued.

Bluestein added that the company has ample liquidity and a strong balance sheet to support its near-term capital requirements. As the venture capital industry continues to assess the impact of the SVB receivership, we will continue to evaluate our overall liquidity position and take proactive steps to maintain the appropriate liquidity position based on the then-current circumstances. Also, he said they have no near-term material maturities, with its nearest significant maturity obligation in 2026.

He also cited the firm’s diversified portfolio, which is focused on pre-IPO and mergers and acquisitions (M&A), innovative high-growth venture capital-backed companies at their expansion (venture growth), and a variety of investments in technology, life sciences, and sustainable and renewable technology industries.

Further, he said the firm has redoubled its efforts in credit monitoring and management to gain insight into the economic impact this situation will have on the greater venture market and the macroeconomy.