How Will Startups Cope Regarding Silicon Valley Bank Crises?

In the current flurry of reports conveying the hell out of the Silicon Valley Bank (SVB) crisis, while the competitive landscape is sorted out and more is learned about how founders and their VC partners are reacting, a pertinent question to ask is: 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 is 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.