TechCrunch is currently busy reporting the hell out of the SVB crisis, but as we sort out the competitive landscape and learn more about how founders and their VC partners are reacting, I have a question: How are startups going to pay for stuff while the mess is sorted out?
According to the government, “insured depositors” at SVB “will have full access to their insured deposits no later than Monday morning.” That’s good, as it appears some capital will be available to some of SVB’s customers in short order. The issue is that the FDIC insures a maximum of only $250,000 for every account.
This crisis is going to kill a host of startups, either quickly or by simply adding enough operational friction to bring them to their knees.
Sure, to the average person that is a lot of money. For a startup that needs to make payroll, it is not.
And payroll is just one expense. What about paying cloud providers? Software vendors? Partners? Handling refunds for services and products? Any sort of cash use is now going to be nigh impossible for startups that had a material percentage of their capital at SVB.