A 10-step manual for founders with bank accounts in Silicon Valley

Yesterday the United States experienced its second largest bank failure in history. In the world of technology, Silicon Valley Bank (SVB) was one of the largest banks supporting small businesses, but today tens of thousands of depositors cannot access capital.

This is not the first time that I have witnessed a funding crisis. I’ve been building technology companies for over 20 years: 15 years in software/internet and five years in advanced hardware. Previously, I founded Archer Aviation, which went public in 2021 for $2.7 billion. Prior to that, I founded Vettery, which was acquired for $110 million.

In 2020 when COVID-19 hit I was raising my Series A for Archer and the VC funding environment came to a complete halt. Within 48 hours, every meeting I had was cancelled.

While I hope for the best for companies doing business with SVB, it is important that founders and CEOs plan for the worst. It will be the weekend that will differentiate a good entrepreneur from a bad one.

Here’s a 10-step guide for founders and CEOs that can increase your company’s chances of success:

1. Meet at the office

This weekend you are in the war room. Spend time developing a thoughtful plan based on the many scenarios that could unfold. It’s best to prepare for the worst, stay calm and execute with precision.

The goal of this session is to thoughtfully document a plan that will extend the cash trail, establish talking points for communication with employees, and identify any levers you can pull immediately to save money.

2. Build a three-person internal tiger team

This team should consist of the CEO, CFO, and the people who drive the overall operations of products and people. Small teams make it easier to communicate and act quickly, but a mentor who has experience in economic cycles like this could also be helpful.

The goal of this team is to extend remaining cash for at least 30 days in hopes that uninsured depositors will quickly see high recovery rates. The longer your lead, the higher your chance of success.

3. Start communicating with investors now

If you need more capital than the Federal Deposit Insurance Corporation (FDIC) provides, reach out to current investors and be transparent about your SVB exposure. Be direct: Ask them if they are able to wire you money to cover your capital needs, even if that means there are no conditions in place.

I would also start compiling a list of all the non-current investors in my network and be ready to contact them on Monday morning. Make an effort to keep track of all of this so you can stay organized in case clearing deposits takes several weeks.

You will find that good investors will step in to help you because they understand that this situation will not last forever. Your request is to get them to lend fresh money or buy deposit claims directly. If things go wrong, you don’t want to be one of the 40,000 companies calling investors on Monday.