What Now, After the SVB Collapse? — Unsolicited Thoughts

Ash Rust
2 min readMar 17, 2023
[Image Source: New York Times]

For the first time in my ~20 years in tech, everyone I have spoken to in the last 10 days, has first mentioned the same thing: SVB. Here’s the main questions about the SVB bank collapse, that I have seen this week.

Should we move money back to SVB?

I see lots of public support for this, along with the request from the new SVB CEO, pointing out new deposits are fully insured. We are not recommending going back for now as: 100% deposit insurance from the FDIC is subject to politics and thus change. There are lots of reports of website issues and slow wire service, and you have other “tech bank” options with potentially complete FDIC insured products.

What is the right approach to long-term cash management now?

The current thinking for startups up to the growth stage seems to be: multiple bank accounts across large and smaller banks. You’ll use the large bank’s “cash sweep” account for your unused cash to ensure it’s fully backed by the US government (US Treasuries). Then your day-to-day operations can be conducted from a smaller, “tech” bank where your operating cash is a low enough balance to be fully insured too. Using services like Brex and Mercury might make this less hassle as they offer 7-figure FDIC insurance on their accounts. You can also track your current FDIC coverage using Puzzle (Sterling Road is an investor).

How bad is this for tech? Will nobody bank startups now?

SVB was a huge fixture of Silicon Valley, and tech in general, for 50 years; that is going to leave a big hole in the near term. However, SVB was making very good money on their tech business, and recently, there’s been a lot more competition both for startup banking and venture debt. Over the last 2 weeks, we have seen those new entrants do great work to earn startup and VC business; this makes me bullish that the hole SVB leaves will be filled, even if it’s not immediate.

Let me know your thoughts in the comments!

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