How is the SVB situation affecting your startup?

Disclaimer: I know next to nothing about the financial system or banking inside baseball. This is just one founder's reaction to the whole mess.

We were reluctant to move our funds most of the day yesterday. Felt like a lot of dumb panic. We had emails from a few investors, most saying "stay calm" but one saying "move your money to this bank that I'm invested in!" ugh.

We decided near the end of the day to move at least half our funds (in a money market) out, but by then it was too late to initiate anything. Now we're finding this morning nobody at SVB is returning our calls. We are able to log into the online portal just fine. So not sure if/when we'll be able to to move anything.

Annoyingly, we're moving it because everyone else is moving it. I know it's a really dumb, self-fulling prophecy but at this point you don't want to be the last in line.

Note: I'm still not actually worried that our money will evaporate permanently. But I can definitely see a situation where it is inaccessible for several weeks, causing issues with payroll and operations. I expect worst case a large bank will swoop in last second and buy all the dumb investment vehicles/bonds for pennies on the dollar and then our access to cash will come back.

CNBC (live TV) is reporting efforts to raise capital have failed and deposits are fleeing faster than talks about a sale are proceeding. Lots of reports that its online banking systems are "down" or suspended.

IMO there's a very good chance the bank enters FDIC receivership by Monday, and there may not be room to maneuver much anymore.

Edit 10:05 am eastern: David Faber live on CNBC says he's hearing deposits are flowing out too quickly for a sale to be negotiated. Quote: "That may "set up something else" over the weekend"

We only have an SVB account because of Stripe Atlas. Back then (2020) SVB was the only option, they hadn't added Mercury yet. I wonder if you still get SVB as an option today, or if Mercury is the default.

I got annoyed with SVB because the online banking feels from the 90s and they charged fees that I found excessive. Switched to Brex a while ago, and never looked back.

I was planning on closing our SVB account for a while, but didn't get around to yet. Now it seems like it might close itself. I wonder what the process will look like to get the $300 back we had on there.

> most startups in the US bank with them

Is this true? And if so, how was this not a major red flag for investors earlier?

From what I gather as an outsider, it sounds like SVB has most of its assets in the form of loans to tech startups and most of its liabilities in the form of deposits from tech startups. This seems like an obvious recipe for disaster in the event of a tech downturn, no?

EDIT: People have clarified that the bonds are the big problem on the assets side, not the loans. They had a bunch of low interest rate bonds that now have to be sold at a loss because interest rates are much higher.

I think this thread will have tons of views from people in the startup world that are likely to be SVB customers. If we all agree to not do run in the bank, it will improve chances for SVB to make it through the next few days.

I'll start with committing not to withdraw money my company [redacted] holds in the bank.

We stand by SVB.

I invite others to do the same.

I work at a bank most people are trying to park their funds at. It is a fucking PANIC mode disaster for them. Large companies in the Valley are trying to dump 100's of millions into our accounts

I'm more strongly affected than I thought I would be, as all the giggling and schadenfreude is distracting me from my work.

We're under the FDIC threshold in our account at the moment, so we are just riding it out expecting to get fully recouped in case of bank insolvency. We're looking into additional lines of credit for the short-term in case we're locked out of our funds for an excessive length of time.

It sounds like it's too late to withdraw anyways, so all their customers can do at this point is exercise an emergency plan and line up options for short-term liquidity.

Every single founder I know in Brazil who has an SVB account has either withdrawn their funds or is attempting to open another account with a different bank to do so completely.

No plans to move money out. But definite plans to create a new, additional account elsewhere and when payment for current orders in process comes in over the next 30 to 60 days, have those new funds go into the new account. (Basically, diversifying is good, and I shoulda/woulda/coulda done it sooner, but it was never my top priority... until now.)

Can we stop for a second and comment on how tailoring a bank to startups is a bad idea?

You don’t get any exposure to any of their potential hyper-growth in the form of debt/equity.

All you get is the deposits but they also don’t grow, the total just becomes concentrated in the accounts of the few survivors while all the other accounts go to zero as most startups die.

I have about $1800 in it as I was forced to open an account with them for Stripe atlas. It was a bit more but I think they deduct $25 / mo for the past 3 years. Not really using it since Stripe started in India recently.

From what I understand since my amount is low I don't have to really do anything. Is that correct? Any advice for me?

I think that the bank gets rescued, probably very soon, the next few days.

To let it fail will harm a significant portion of the US startup community and damage the country's ability to continue to innovate. In many ways, it is too big to fail because of its ties to the startup community.

I think there is no other solution right now be a federal rescue of SVB. It is likely insolvent right now if they had to sell their assets at firesafes prices. An orderly unwind would help all involved and preserve a lot of value.

I'm SVB adjacent and all my employee stock purchase investments are under water, and they weren't a few weeks ago.

Stripe Atlas has supported SVB accounts for a while. I believe it may have been the only bank account supported at the beginning, but regardless, I suspect there are a lot of Atlas companies backed by SVB accounts.

I own put options that I bought yesterday at market open. It's not affecting my startup, but it's affecting my portfolio and I'm not happy that I can't sell those options.

Since yesterday afternoon, I’m unable to log in to the website and the mobile app is down. I haven’t had to make any transfers yet, but I’m hoping and expecting that will still work.

I'm sorry... when did hackernews became SVB news?

90% of my feed since yesterday contains the word SVB from hackernews.

Is this some kind of US thing? Can we just move on to other things?

they never returned my calls as a self funded startup so fuck them

they are trying to raise money? that’s cute, maybe they can create a pitch deck and be ridiculed a million times just like all of us

“you need a team” “come back when you have revenue” “we need to see more revenue” “that market is too small” etc

but you know what? they got buddies and you don’t as a founder

Why hasn't SVB offered to split people's accounts into multiple accounts capped at $250K each? This would be a win for everyone, correct? The cash is guaranteed, companies don't need to waste their time migrating a new bank, and SVB doesn't have to worry about their fractional reserve.

Investor here (trying to buy into SVB), but I don't currently own anything, nor do I have any current accounts with SVB.

Everything I can see about them is completely overblown. Short and sweet version of research so far:

- They had sold their bond portfolio for 1.8B loss (originally 21B, this is 8.5% loss)

- They decided to raise money to match that loss (news release on 3/8/23)

- Headlines are confusing people with "can't sell" referring to the 3/8 attempt at capital raise, but now people think SVB is trying to sell

- Their Total Equity is around 13B (last balance sheet) -- that means if they completely dissolved and paid off all debts they would still have 13B on the balance sheet. Market Cap EOD 3/9 was 6.5B -- half of their actual asset value

- If they go into cash insolvency and get bought out, they will likely have to sell those illiquid assets at a discount (let's estimate a 40% discount) - it's still worth 6.8B.

Y'all SVB has been through this before, both in .COM and and '08. Also, to be clear -- I do not own any stock (but I want to)

Wonder if anybody had seen it coming? And is about to do the next big short.

Personally, I don't think there's a real problem unless everyone panics.

Banks are well-regulated and stable and have been for decades. That said, my investors & cofounder have both expressed gratitude that our startup banks with Mercury and not SVB.