With SVB locked in, how are startups going to pay for things?
With SVB locked in, how are startups going to pay for things?
TechCrunch is currently busy reporting the hell out of the SVB crisis, but as we sort through the competitive landscape and learn more about the reaction of founders and their VC partners, I have a question: how are startups going to pay for things while the mess is settled?
According to the government, “insured depositors” of the SVB “will have full access to their insured deposits no later than Monday morning”. This is good, as it looks like some capital will be available in the short term for some SVB customers. The problem is that the FDIC only insures a maximum of $250,000 for each account.
This crisis is going to kill a slew of startups, either quickly or simply by adding enough operational friction to bring them to their knees.
Of course, for the average person, that’s a lot of money. For a startup that needs to do payroll, that’s not the case.
And the pay is fair A costs. What about paid cloud providers? Software publishers? The partners? Do you manage refunds for services and products? Any sort of use of cash is now going to be nearly impossible for startups that held a large percentage of their capital at SVB.
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