Welcome to Startups Weekly, a nuanced look at this week’s startup news and trends by Senior Reporter and Equity co-host Natasha Mascarenhas. Subscribe to receive it in your inbox here.
Writer’s Note: We’re breaking with our usual formatting this week because there was a once-in-a-generation collapse of one of the country’s largest banks. Today’s space is devoted to our coverage of this issue, but we’ll return to broader programming next week.
On Friday, I wrote about how Silicon Valley Bank has been shut down by regulators, who are now responsible for the bank’s deposits. The bank reopens on Monday, which means we are – and I mean that in the most collective sense – in for a weekend of pause, fear and further questioning. This is not a story of the week; it is a story for the coming weeks and months. As Y Combinator CEO Garry Tan put it: this could delay startups and innovation by 10 years.
After spending hours talking to founders and venture capitalists about SVB, it’s clear that explaining the state of play or the bank’s strengths won’t necessarily stop the panic we’re seeing. It’s the panic that seeps into the volatility at other banks; even those positioned to take advantage of SVB’s bust just hours earlier.
The story is fast-paced and ever-changing, so I’m not going to give you a half-baked version. What I know so far is that the collapse of SVB, despite a rational analysis of the factual business basis, is a human story. Here are the stories we’ve written about the crash so far:
How founders react to the Silicon Valley Bank crash
businessupdates.org spoke with more than a dozen founders about how the bank’s crash will affect their businesses. In this piece, we’ll highlight some of the stories, ranging from announcing fears that they won’t be able to earn payroll to compiling a discount code in a timely manner and proclaiming it as a Hail Mary.
With the SVB locked up, how are startups going to pay for things?
My colleague Alex Wilhelm posed one of the biggest questions out loud so founders don’t have to: How are startups going to pay for things if SVB is still locked up? In his TC+ analysis, he explains that entrepreneurs need to think about more than just payroll administration. How will they pay cloud vendors or process refunds? (I told you it’s a human story.)
For startup competition, SVB’s nightmare is a win and a challenge
This piece attempts to dismantle the idea that SVB’s fall is a net positive for its competitors. Mary Ann Azevedo and I spoke to a few startups experiencing an influx of demand: Some are cautious; some are excited. The question remains: Will startups screwed over by a traditional bank now risk turning to a private tech startup to hold onto their cash? Where do you go when you are reminded of risk?
Venture companies advise portfolio companies to get money from SVB
For our third point of view, let’s talk about venture capitalists. On Thursday, a number of VC firms — including but not limited to USV, Founders Fund, Hustle Fund, Inspired Capital, and Valor Equity — advised startups to raise money from SVB. Some advised diversification.
If you want more, we certainly have more, including notes on stopped trading, a recap of how this happened so quickly, and “collywobbles” elsewhere.
Table of Contents
Seen on businessupdates.org
The long goodbye at Salesforce continues with more layoffs today
How the FBI Proved a Remote Administration Tool Was Actually Malware
Meta is working on a decentralized social app
Elon Musk apologizes after publicly mocking a Twitter employee with a disability
Seen on businessupdates.org+
Uncertainty surrounds the billion-dollar USDC empire as issuer Circle held reserves with Silicon Valley Bank
Everything you know about computer vision could soon be wrong
As it turns out, reducing burns in startups is more aspiration than reality
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