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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?

#131

Post by zamnos »

mikeyouse wrote: post #103
diebeforei485 wrote: post #84

Earlier quoted context omitted.

There have been pretty much zero instances of people's money evaporating from U.S. bank accounts, even above the FDIC guarantee.

Not sure why this is downvoted. FDIC-insured accounts have never lost funds in the nearly 100 years since the FDIC was established. And I think there was one? maybe two? times depositors lost funds in excess of the FDIC limits over that same time frame?

When Lehman Brothers collapsed in 2008, many people lost money over $100k. So many, that FDIC retroactively raised the insured limit to $250k and made people whole up to $250k. A lot of the money over that simply evaporated. Today, the limit is $250k, but as SVB's clients were mostly startups, and startups need to make payroll and pay operating expenses like their AWS/GCP bill, they'd easily have cash in excess of $250k at SVB.

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

#132

Post by draw_down »

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…

[dead]

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

#133

Post by nscalf »

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.

Oof, absolutely terrible idea. The first priority always has to be making sure your business survives. You’re doing a disservice to your investors and employees.

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

#134

Post by mikeyouse »

zamnos wrote: post #131
mikeyouse wrote: post #103

Earlier quoted context omitted.

Not sure why this is downvoted. FDIC-insured accounts have never lost funds in the nearly 100 years since the FDIC was established. And I think there was one? maybe two? times depositors lost funds in excess of the FDIC limits over that same time frame?

When Lehman Brothers collapsed in 2008, many people lost money over $100k. So many, that FDIC retroactively raised the insured limit to $250k and made people whole up to $250k . A lot of the money over that simply evaporated. Today, the limit is $250k, but as SVB's clients were mostly startups, and startups need to make payroll and pay operating expenses like their AWS/GCP bill, they'd easily have cash in excess of $…

>> When Lehman Brothers collapsed in 2008, many people lost money over $100k. So many, that FDIC retroactively raised the insured limit to $250k and made people whole up to $250k. A lot of the money over that simply evaporated.

That's not at all true.. 100% of Lehman customers received 100% of their funds. Secured creditors also received 100% of their funds.

https://www.sipc.org/news-and-media/news-releases/20220928

100% of depositor funds from WaMu (including every penny over the FDIC limit) were safe as well after the Chase buyout.

https://www.fdic.gov/resources/resolutions/bank-failures/fai....

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

#135

Post by bloppe »

Edmond wrote: post #88
asimpletune wrote: post #74

Earlier quoted context omitted.

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.

There is that economic adage attributed to Keynes: In the long run we're all dead. If you need money but your current assets in whatever form can't furnish that fund for you, I am afraid you're broke.

So you're saying having zero money is equivalent to having future money that can be borrowed against in the present?

Obviously the latter is not as good as just having money. But it's clearly better than the former.

Therein lies the difference between solvency and liquidity problems.

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

#136

Post by zamnos »

mikeyouse wrote: post #134
zamnos wrote: post #131

Earlier quoted context omitted.

When Lehman Brothers collapsed in 2008, many people lost money over $100k. So many, that FDIC retroactively raised the insured limit to $250k and made people whole up to $250k . A lot of the money over that simply evaporated. Today, the limit is $250k, but as SVB's clients were mostly startups, and startups need to make payroll and pay operating expenses like their AWS/GCP bill, they'd easily have cash in excess of $…

>> When Lehman Brothers collapsed in 2008, many people lost money over $100k. So many, that FDIC retroactively raised the insured limit to $250k and made people whole up to $250k. A lot of the money over that simply evaporated. That's not at all true.. 100% of Lehman customers received 100% of their funds. Secured creditors also received 100% of their funds. https://www.sipc.org/news-and-media/news-releases/20220928…

From your link https://www.sipc.org/news-and-media/news-releases/20220928:

> Distributions to unsecured general creditors with allowed claims totaled over $9.372 billion, representing a 41.2841 percent recovery.

That sure sounds like 58.7259% didn't recover what they were owed. Mind explaining why that isn't the case?

And what about IndyMac? IndyMac depositors only got 50 cents on the dollar.

https://www.depositaccounts.com/blog/indymac-depositors-are-...

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

#137

Post by sdfghswe »

hkhanna wrote: post #2

Personally, I don't think there's a real problem unless everyone panics. Banks are well-regulated and stable and have been for decades. That said, my investors & cofounder have both expressed gratitude that our startup banks with Mercury and not SVB.

What do you mean, there isn't a real problem? It's already been shut down.

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

#138

Post by bloppe »

time_to_smile wrote: post #97
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…

> Felt like a lot of dumb panic. A lesson everyone should have learned from the toilet paper scarcity crisis during the pandemic is that it doesn't matter if it's rational or smart, if you want to keep your ass clean make sure you're in the front of a line when people are panicking. You could make a pretty compelling argument that the last decade the entire tech sector has been propped up by "dumb exuberance", but pe…

If you can tell that people are panicking, you're not at the front of the line.

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

#139

Post by Edmond »

bloppe wrote: post #135
Edmond wrote: post #88

Earlier quoted context omitted.

There is that economic adage attributed to Keynes: In the long run we're all dead. If you need money but your current assets in whatever form can't furnish that fund for you, I am afraid you're broke.

So you're saying having zero money is equivalent to having future money that can be borrowed against in the present? Obviously the latter is not as good as just having money. But it's clearly better than the former. Therein lies the difference between solvency and liquidity problems.

Not at all, my point is to avoid fancy words like "solvency" and "liquidity", they blind you to the basic fact that if you need cash today and you can't get it then you're broke.

Whether you have assets that *you* believe you could draw on in the future doesn't matter when your need is immediate.

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

#140

Post by ornornor »

bloppe wrote: post #138
time_to_smile wrote: post #97

Earlier quoted context omitted.

> Felt like a lot of dumb panic. A lesson everyone should have learned from the toilet paper scarcity crisis during the pandemic is that it doesn't matter if it's rational or smart, if you want to keep your ass clean make sure you're in the front of a line when people are panicking. You could make a pretty compelling argument that the last decade the entire tech sector has been propped up by "dumb exuberance", but pe…

If you can tell that people are panicking, you're not at the front of the line.

I’m reusing that.
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