businessupdates.org is currently busy reporting on the SVB crisis, but as we sort out the competitive landscape and learn more about how founders and their VC partners are responding, I have a question: How are startups going to pay for things while the mess gets sorted out?
According to government‘insured depositors’ at SVB ‘have full access to their insured deposits by Monday morning at the latest’. That is good, because it seems that some capital will be available in the short term for a number of SVB clients. The problem is that the FDIC only insures a maximum of $250,000 on each bill.
This crisis will kill numerous startups, either quickly or simply by adding enough operational friction to bring them to their knees.
Sure, for the average person that’s a lot of money. This is not the case for a startup that has to do payroll administration.
And payroll is normal An cost. What about paying cloud providers? Software suppliers? partners? Handle refunds for services and products? Any kind of cash use now becomes almost impossible for startups that had a material percentage of their capital with SVB.