Startup founders, how will your banking practices change after SVB?

Question

For those that will look to change, for example by maybe using multiple banks, what problems do you expect to face?

dstala · Accepted Answer

Some of the banks have started providing higher insurance. Seems promising. Other banks might also have something similar in place
Below is excerpt from the mail that I received from them today.
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We know you’re more concerned than ever about protecting your cash — and the safety of your deposits is our top priority. That’s why we’ve continuously worked with our partner banks1 to offer additional FDIC insurance — first to $1M, then to $3M.
Now, we’ve gone a step further. By Monday, you will have access to up to $5M in FDIC insurance — 20x the per bank limit.
The way Mercury is able to offer customers this expanded FDIC coverage is through our partner banks’ sweep networks, which spread customer deposits across a network of established FDIC-insured program banks, including Goldman Sachs, Morgan Stanley, and Wells Fargo. In addition to the increased coverage, these sweep networks also protect your deposits by holding cash in multiple places, which limits the risk of any single point of failure.
To protect funds beyond your insured balance, Mercury Vault is automatically enabled on all accounts to monitor cash and provide suggestions on how to manage bank risk. For example, Vault can help you move deposits above the $5M FDIC insurance cap to a money market fund (99.5% invested in U.S. government-backed securities and held 100% in your name) through Mercury Treasury.

drachdesigns · Answer

Split cash across multiple banks. This is standard practice for most, but harder to do for a startup: more time consuming, harder to manage, etc. If it becomes existential tho (what it looks like), probably worth doing even with the added effort.