As startups wait for clarity on the SVB crisis, many are turning to their VC partners for help paying for goods and services. However, with SVB now effectively bankrupt and no clear path to solving the problem, this could prove difficult. One solution is for startups to piggyback off of other companies while they are in a transitional period; another is to find alternate funding sources, such as crowd-funding or Title III capital.”
The government has not yet said how much money will be available to customers of the bankrupt bank, but it is likely that some capital will be available as soon as Monday morning. At present, the FDIC insures a maximum of only $250,000 per account, so there are a number of people who could lose a significant amount of money if they have deposits at SVB.
The rapid proliferation of startups in recent years has given birth to an unprecedented amount of innovation and creativity. However, this crisis is going to kill a host of these companies by either quickly killing them due to operational friction or simply adding enough stressors that they’re forced to close their doors. As a result, the sudden loss of so many promising startups will stifle growth and creativity in the industry as a whole.
For a startup that needs to make payroll, the average amount of money taken in per month is not a lot. However, for a startup like Sweet Talker that is looking to grow quickly and cover its costs, it can be crucial to bring in as much money as possible. Due to this reason, it is important for Sweet Talker to keep their overhead as low as possible so they can
One effect of SVB’s firing was that startups now have to find other ways to pay for expenses. Cloud providers, software vendors, and partners will all become more expensive. Handling refunds for services and products will become more difficult as well. This could mean a serious financial dilemma for some startups which had a material percentage of their capital invested in SVB
Based on the information above, it is evident that we need a variety of financing options available to American startups in order to avoid a mass shutdown. Brex may be one option, but we will need many more before things are calm again.
Over the course of his career, Garry Tan has influenced and inspired a number of people with his work in advertising. He is known for his creative and innovative methods, which have helped him become one of the most successful advertising directors