[HN Gopher] VC firms are urging founders to pull money from trou...
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VC firms are urging founders to pull money from troubled Silicon
Valley Bank
Author : rmason
Score : 36 points
Date : 2023-03-09 21:48 UTC (1 hours ago)
(HTM) web link (www.semafor.com)
(TXT) w3m dump (www.semafor.com)
| jeffbee wrote:
| I like how every time I look at this and assume that the market
| surely must have internalized this information by now, an hour
| later the stock is down another 15%.
| majormajor wrote:
| Why would VC firms urge their founders to all use the same bank
| in the first place? Seems like a recipe for Bad Things(tm)...
|
| (I assume the answer is some combo of laziness and kickbacks and
| old boys club and such...?)
| convolvatron wrote:
| not ..completely. startups have a slightly different profile
| than normal businesses, and SVB is well-oiled machine for
| working with them. maybe its more charitable to say that they
| have specialized?
| aussiegreenie wrote:
| Why?? Banks are * _VERY*_ safe.
| UncleOxidant wrote:
| One can imagine that a startup might have more than the $250K
| FDIC limit in the bank. I think that's what they're being
| advised of: Get under the $250K limit ASAP.
| gumby wrote:
| Most portfolio companies have more than the FDIC limit. My
| preference is to have 2-3 months in cash, the rest in
| commercial paper (which would not be threatened by the bank
| failure, but did "break the buck" in 2008). In the early stage
| 2-3 months of cash is much less than the FDIC limit, but later
| on that could change.
|
| I've been using SVB since the mid 90s, but most recently chose
| First Republic instead. FR poached some of the great SVB people
| anyway so it wasn't a huge change.
|
| FWIW, SVB got into trouble in the 80s due to their real estate
| practice. They stuck to their knitting after that (except they
| kept their wine practice, which is small and I guess amusing)
| so I find this situation rather interesting.
| capableweb wrote:
| Well, they're safe until they aren't. Bank runs have happened,
| and more of them will in the future. Nothing is 100% although
| using banks is probably the safest storage for funds, if you
| compare...
| ceejayoz wrote:
| Bank collapses cause disruption, and potential loss of balances
| over the FDIC limits. A well-funded startup really doesn't want
| their money in a failing bank.
| shadowofneptune wrote:
| Looking at the FDIC website:
|
| > The FDIC does NOT cover (even if purchased at an insured
| bank): Stock investments Bond
| investments Mutual funds Life insurance
| policies Annuities Municipal securities
| Safe deposit boxes or their contents U.S. Treasury
| bills, bonds or note
|
| This article is about the bank's investments, if I read it
| correctly. Safe for a household does not mean safe for a
| company that lives on investment money.
| ceejayoz wrote:
| There's an equivalent for securities, the SIPC. It's capped
| like FDIC insurance is, but bonds/stocks have _some_
| protection in this regard.
|
| https://en.wikipedia.org/wiki/Securities_Investor_Protection.
| ..
| shadowofneptune wrote:
| Ah, I see. Looks like it still only has a limit of 250,000
| USD, which seems low for modern business. How far would
| that get some of these companies?
| ender341341 wrote:
| Speed, if all your money disappears tomorrow you may miss
| payroll while you're waiting for the FDIC to get you your
| money.
| andrewstuart wrote:
| National bank runs start with one bank.
| greenyoda wrote:
| Big ongoing discussion about Silicon Valley Bank:
| https://news.ycombinator.com/item?id=35086836
| cheriot wrote:
| Maybe I'm wearing a tin foil hat... are any of these VC's
| shorting SIVB?
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(page generated 2023-03-09 23:00 UTC)