Silicon Valley Bank’s stock was in freefall as I wrote this, down 60%, after it announced a $2.25 billion share sale, partially to counter “elevated cash burn” at the startups it banks. That news set off a wave of panic, with some VC firms like USV warning their portfolio companies to move their funds, we reported earlier today. CEO Greg Becker had told me last week that the bank was unprepared for the steep and sudden rise in interest rates that led to a massive slowdown in dealmaking, putting it in a precarious position. Today he was urging the bank’s VC firm clients to “stay calm and to support us just like we supported you during the challenging times.” Read more on our developing coverage.  

If there’s one indication of how difficult the fundraising environment has become, it’s that limited partners—the wealthy individuals and endowments that invest in VC funds—are trying to sell their stakes in those funds. In other words, not only are LPs not interested in your next venture fund, they want out of your last one. 

“There’s a rare LP out there that wants to add venture today,” said Hans Swildens, the founder and CEO of Industry Ventures, an investment firm that buys secondary stakes in companies and other venture funds. Rather, “there’s a lot of people trying to offload everything. 

“Almost every single company and every single fund has shareholders and LPs that are looking for liquidity,” he said.