[jmeister]

"On the startup bailout. It is claimed that the startups who put all their cash in SVB will now be forced to close, so get going with the bailout now. It is not startups who lose money, it is their venture capital investors, and it is they who benefit from the bailout.

Let us presume they don't suffer sunk cost fallacy. You have a great company, worth investing $10 million. The company loses $5 million of your cash before they had a chance to spend it. That loss obviously has nothing to do with the company's prospects. What do you do? Obviously, pony up another $5 million and get it going again. And tell them to put their cash in a real bank this time."

https://johnhcochrane.blogspot.com/2023/03/silicon-valley-ba...

[s1artibartfast]

I'm not sure why this analysis assumes that the startup doesn't have $5 million of debt or somehow gets back the equity they sold.

They're not in the same position they were before. If you're worth 10 million when you have five million in the bank, you are now worth 5 million without it.

If you sold half your company to get the first 5 million, why would keep working if you have to sell the other half?

[muzz]

The "haircut" would have been less than 15%, this is why the bailout of $151B in uninsured desposits was less than $20B and not $151B.

So if they had $5M uninsured in SVB they would have received $4.25M and suffered only a 750k loss.

[coder9874]

Just my 2c as a startup guy - this is patently absurd. VC's would not just write checks for millions again after such huge losses. Many, many startups would shut down and the entire startup/VC ecosystem would be devastated.