Peter Thiel's Founders Fund got its cash out of Silicon Valley Bank before it was shut down, report says

• Peter Thiel's Founders Fund withdrew all its funds from Silicon Valley Bank, Bloomberg reported.
• His VC fund took action after encountering problems with transfers, per the report.

Peter Thiel's Founders Fund had no cash left in Silicon Valley Bank by Thursday as it began to unravel, Bloomberg reported.

A source told Bloomberg the PayPal cofounder's fund had moved to close its exposure to the failing bank after running into problems using SVB's services.

The venture capital group had been engaging in a "capital call" — where it asked investment partners to send funds to invest in a company — by transferring funds to its Silicon Valley Bank account. However, the funds didn't immediately go through as expected.

Following the withdrawals, the fund no longer had any exposure to SVB as of Thursday morning, the unnamed source told Bloomberg. It wasn't clear whether the transfers happened on that day, or earlier.

SVB's share price collapsed after it revealed a $1.8 billion loss Thursday following a $21 billion fire sale of its fixed-income portfolio.

An attempt to raise $2.3 billion to cover those losses failed and the Federal Deposit Insurance Corporation shut it down and took control of customer deposits Friday.

Rising interest rates initiated by the Fed had weighed on the bank's bond offerings, with its 10-year bond spread widening above 1,000 basis points Friday in a sign of distress.

The rising cost of borrowing also made it harder for SVB's core customer base of startups to pick up fresh funding, accelerating outflows.

Thiel's Founders Fund is thought to have propped up several startups that banked with SVB, which provided banking for nearly half of all US venture-backed startups, per its website. The fund had also called for its startups to withdraw their funds from the bank as well.

Bloomberg reported that VC funds Coatue Management, Union Square Ventures, and Founder Collective had all told their portfolio companies to pull their funds from SVB.

Founders Fund and SVB didn't immediately respond to requests for comment from Insider, made outside normal working hours.