my sympathy is with them but please someone explain why companies were putting millions in banks beyond FDIC limit with almost no interest. Could have managed it themselves in a brokerage laddering treasuries or hired someone to do so. This is what big corps do and with interest rates so high seems a no brainier.Would at least think their investors would have insisted on it.
Salaries, rent, debt payments, and AWS bills are charged in dollars. They don't accept T-bills, even though in accounting terms those are "cash-equivalent".
Notice how so much of the fallout is secondary to failed payroll transfers.
Big companies do the same thing, except their cash is kept in bigger banks with more attentive risk-management departments. Apple will never miss payroll due to someone at JP Morgan doing a YOLO on 10-year bonds.
Startup founders are usually not all that well versed in these best practices because it’s the first time they’ve been put in this situation and it’s a distraction from their primary focus to grow the business.
I can't speak for U.S based founders, but for many foreigners wanting to incorporate in the U.S SVB was the only banking option. Stripe Atlas made SVB their sole banking partner and thousands of foreign founders relied on them for all their fundraising needs.
https://techcrunch.com/2023/03/11/silicon-valley-bank-collap...
sam345|3 years ago
jmillikin|3 years ago
Notice how so much of the fallout is secondary to failed payroll transfers.
Big companies do the same thing, except their cash is kept in bigger banks with more attentive risk-management departments. Apple will never miss payroll due to someone at JP Morgan doing a YOLO on 10-year bonds.
orbz|3 years ago
ingenieros|3 years ago
rvz|3 years ago
dsq|3 years ago