What Startups Felt When SVB Failed

I've been thinking about the SVB collapse from the startup side. The banking analysis has been thorough. Duration mismatch, concentrated deposits, digital bank run. But there's another story that hits closer to home. The story of the founders who spent that weekend not knowing if they could pay their teams.

The Payroll Question

The thing non-founders might not fully appreciate is what it feels like when you can't access your operating account. It's not an abstract financial concern. It's names and faces. The engineer who just relocated for your company. The sales rep who has a mortgage. The office manager who's been with you since the beginning. Telling them you don't know when they'll get paid is one of the worst conversations a founder can have.

That's what thousands of founders faced that weekend. SVB wasn't just a bank for startups. For many, it was the only bank. The VC who led your round introduced you to SVB, the lending relationship was there, the credit line was there. The entire financial infrastructure of the company sat in one place. And on Friday, all of it froze.

I've felt versions of that cash uncertainty from my startup days. Not a bank failure, but the general anxiety of managing cash when you're running a company. Knowing your runway down to the week. Watching the balance drop as you wait for a client payment or a round to close. The SVB situation compressed that anxiety into a single weekend and multiplied it by the possibility that the money might not come back at all.

The Blind Spot

Treasury management sounds like something for the CFO of a Fortune 500 company. Most early-stage founders don't think about it at all. You open an account, deposit the round, and start spending. Where the money sits and how it's protected is not on the priority list when you're trying to find product-market fit.

SVB revealed how expensive that blind spot can be. Startups with $10 million or $50 million sitting in a single account at a single bank had no idea that only $250,000 of that was insured. Many didn't know about sweep accounts or multi-bank deposit networks that could have spread the risk. The products existed. The awareness didn't.

First Republic just failed this week. JPMorgan stepped in, but the pattern is the same. Concentrated deposits, concentrated risk, and clients who assumed the bank would always be there. The lesson keeps repeating.

What I'd Tell Founders Now

After watching SVB and First Republic, a few things stand out.

Don't put all your operating capital at one bank. It seems obvious after SVB, but the pull of convenience is strong. Having your checking, savings, credit line, and payroll all in one place is efficient right up until it becomes a single point of failure. Two banking relationships at minimum.

Understand your FDIC coverage. $250,000 per depositor per institution is the baseline. Joint accounts and different ownership categories extend it. IntraFi's cash service spreads large deposits across multiple banks behind the scenes so everything stays insured. These aren't complicated products. They're just not marketed to founders.

Build banking relationships before you need them. Opening an account at a second bank takes days when things are calm. During a crisis, when every startup in the country is trying to do it at once, it takes much longer. The time to set up redundancy is when nothing is wrong.

Think about your banking relationship the way you think about your cloud infrastructure. You wouldn't run your entire product on a single server with no backup. Your financial infrastructure deserves the same thinking.

Both Sides

Sitting where I sit now, I have empathy in both directions. For the founders who spent that weekend in a panic, wondering if everything they'd built was about to end over something completely outside their control. And for the community bankers who spent the same weekend reassuring their own clients that the local bank they'd trusted for decades was nothing like SVB.

The banking system held. The regulators moved. The deposits were protected. But the scar tissue from that weekend is going to change how founders think about banking for a long time. It should.