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Ask HN: How is the SVB situation affecting your startup?

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Re: Ask HN: How is the SVB situation affecting your startup?

#71

Post by huhneverthot »

jtarud wrote: post #58

I think this thread will have tons of views from people in the startup world that are likely to be SVB customers. If we all agree to not do run in the bank, it will improve chances for SVB to make it through the next few days. I'll start with committing not to withdraw money my company [redacted] holds in the bank. We stand by SVB. I invite others to do the same.

Oh man I actually laughed out loud at this. I don't think your HN comment is going to do anything in the face of the classic prisoner's dilemma.

Re: Ask HN: How is the SVB situation affecting your startup?

#72

Post by [deleted] »

ak_111 wrote: post #66
JumpinJack_Cash wrote: post #64

Can we stop for a second and comment on how tailoring a bank to startups is a bad idea? You don’t get any exposure to any of their potential hyper-growth in the form of debt/equity. All you get is the deposits but they also don’t grow, the total just becomes concentrated in the accounts of the few survivors while all the other accounts go to zero as most startups die.

It is a great idea in a 0% interest world, SVB's stock price went from $24 in 2010 to $710 in 2020.

[deleted]

Re: Ask HN: How is the SVB situation affecting your startup?

#73

Post by JumpinJack_Cash »

ak_111 wrote: post #66
JumpinJack_Cash wrote: post #64

Can we stop for a second and comment on how tailoring a bank to startups is a bad idea? You don’t get any exposure to any of their potential hyper-growth in the form of debt/equity. All you get is the deposits but they also don’t grow, the total just becomes concentrated in the accounts of the few survivors while all the other accounts go to zero as most startups die.

It is a great idea in a 0% interest world, SVB's stock price went from $24 in 2010 to $710 in 2020.

Banks are tech companies now?

Add them to the list lol

Re: Ask HN: How is the SVB situation affecting your startup?

#74

Post by asimpletune »

gizmo wrote: post #61
Lightbody wrote: post #55

Disclaimer: I know next to nothing about the financial system or banking inside baseball. This is just one founder's reaction to the whole mess. We were reluctant to move our funds most of the day yesterday. Felt like a lot of dumb panic. We had emails from a few investors, most saying "stay calm" but one saying "move your money to this bank that I'm invested in!" ugh. We decided near the end of the day to move at le…

When assets This isn't just a liquidity problem, this is a solvency problem. The bonds they have aren't temporarily worth less because nobody wants to buy them, the bonds are liquid and have a fair market value based on the current interest rate environment. Your cash isn't at the bank anymore. Your cash has been invested in bonds and those bonds are now worth less than the number you see in your bank account. That's…

It's not a solvency problem. The bonds are valued based on when they mature, not what they fetch on the open market.

It is a liquidity issue, which means the money is there, but they can not access the money in the amount of time they need it by.

Re: Ask HN: How is the SVB situation affecting your startup?

#76

Post by blitzar »

rr808 wrote: post #52
NickC25 wrote: post #34

I own put options that I bought yesterday at market open. It's not affecting my startup, but it's affecting my portfolio and I'm not happy that I can't sell those options.

Ring your broker. You can probably still execute the puts and you'll be short.

Then you have to borrow the stock and you are short a stock that you cant buy back because trading is halted - it could reopen at 2x the current price.

Better to wait for the trading halt to be lifted, naked puts are the best way to express a short position here.

Re: Ask HN: How is the SVB situation affecting your startup?

#77

Post by nemothekid »

gizmo wrote: post #61
Lightbody wrote: post #55

Disclaimer: I know next to nothing about the financial system or banking inside baseball. This is just one founder's reaction to the whole mess. We were reluctant to move our funds most of the day yesterday. Felt like a lot of dumb panic. We had emails from a few investors, most saying "stay calm" but one saying "move your money to this bank that I'm invested in!" ugh. We decided near the end of the day to move at le…

When assets This isn't just a liquidity problem, this is a solvency problem. The bonds they have aren't temporarily worth less because nobody wants to buy them, the bonds are liquid and have a fair market value based on the current interest rate environment. Your cash isn't at the bank anymore. Your cash has been invested in bonds and those bonds are now worth less than the number you see in your bank account. That's…

>The bonds they have aren't temporarily worth less because nobody wants to buy them, the bonds are liquid and have a fair market value based on the current interest rate environment.

Maybe I’m missing something but couldn’t you just potentially wait for the bonds to mature?

Re: Ask HN: How is the SVB situation affecting your startup?

#78

Post by NickC25 »

eropple wrote: post #49
NickC25 wrote: post #40

Earlier quoted context omitted.

No, I own put options on SIVB itself. Trading was halted in premarket and has yet to reopen. Honestly, it's disgusting. The amount of profit I would have made would be more than life-changing at a time when I could really use the money.

TBH, if you're knowledgeable enough to be playing with puts, you should know that banks don't act like other equities in cases of extremity. It may be a bummer in the individual case, but it keeps the money machine working for society as a whole.

Honestly, that's a fair point (playing with puts) - and yeah, I know that if trading was resumed SIVB shares would drop to $0 or close to it, which would probably trigger a much larger collapse because lots of banks had exposure to SIVB.

Thing is though, that's the whole point of banking stress tests and also why the Fed should have raised rates much sooner after COVID.

On a side note, the fact that VCs were giving out tons of money to lots of companies at crazy valuation multiples, that had no reason to exist, much less take in millions of investment...is definitely part of this whole mess. Banks and VCs need to do a lot more due diligence before just giving out money.

On that - interest rates need to be reasonable to make sure people who want to save their money get an appropriate return. 0% or near-0% is just financially irresponsible to those of us who remember getting 5-10% annually in our savings accounts.

Re: Ask HN: How is the SVB situation affecting your startup?

#79

Post by BasilPH »

We only have an SVB account because of Stripe Atlas. Back then (2020) SVB was the only option, they hadn't added Mercury yet. I wonder if you still get SVB as an option today, or if Mercury is the default.

I got annoyed with SVB because the online banking feels from the 90s and they charged fees that I found excessive. Switched to Brex a while ago, and never looked back.

I was planning on closing our SVB account for a while, but didn't get around to yet. Now it seems like it might close itself. I wonder what the process will look like to get the $300 back we had on there.

Re: Ask HN: How is the SVB situation affecting your startup?

#80

Post by blitzar »

JumpinJack_Cash wrote: post #64

Can we stop for a second and comment on how tailoring a bank to startups is a bad idea? You don’t get any exposure to any of their potential hyper-growth in the form of debt/equity. All you get is the deposits but they also don’t grow, the total just becomes concentrated in the accounts of the few survivors while all the other accounts go to zero as most startups die.

It is an excellent customer base for a bank. Startups are going to burn at a fairly moderate rate, such that you have a fairly good idea of the cash flows you would face in the normal course of business - it wouldn't take the most advanced Ai in the world to know for every startup on your books what their cash flow out will look like for the next 12-24 months.

By also being tied into the valley and the big VCs you have a fairly consistent stream of new accounts and large deposits throughout the year.

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