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OpenAI CEO Sam Altman sent startup six-figure loan after SVB collapse

businessinsider.com

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Re: OpenAI CEO Sam Altman sent startup six-figure loan after SVB collapse

#11

Post by giraffe_lady »

wpietri wrote: post #5
warent wrote: post #3

Earlier quoted context omitted.

I don't really know much about venture capital but this sounds like a gross oversimplification. More like, the startups that are saved will be a mixed bag of worthwhile startups and dead-end startups. Meanwhile some worthwhile ones will sadly be left behind with the dead-end ones.

Depends on your perspective. One of the articles of faith in this industry is that good startups get investment and succeed, while bad ones fail. To whatever extent that's true, it won't be particularly worse here. Startups who made treasury management errors and are experiencing cash crunches can make very good cases for bridge loans and extra investment from their existing investors. If their investors are like, "n…

I'm normally very against the HN norm of just naming a fallacy and considering an entire argument dismissed but in this case I think it does apply. This is not a Just World, some unworkable companies will get bridge funding because of their connections and no other reason.

Aside from that timing is always a thing. There's certainly a company out there that is 8 months away from proving the soundness of their idea that now only has six months of funding, or whatever.

The idea that in every case, "the market" or whatever will arrive at the most perfectly correct conclusion is silly at any time, but particularly in one of uncertainty and upheaval.

Re: OpenAI CEO Sam Altman sent startup six-figure loan after SVB collapse

#12

Post by gfsdgsfgfds »

Just one anecdote of many. I'm a founder of a bootstrapped startup. We are/were with SVB. On Thursday I tried to get a Brex cash account setup to move some operational cash there but it didn't happen in time. I thought of wiring money out of SVB to my personal account but decided it felt too dodgy. Payroll for 2 weeks ending March 15th had to be funded through Gusto by tomorrow (March 13th). So I did all I could do without delaying payroll, dropped my salary to near zero and wired the payroll money to Gusto from my personal checking account. Being bootstrapped and low headcount this was possible. I'll have to retrospectively do some loan paperwork I guess. It would have been a tougher comms to staff if I didn't happen to have enough liquidity personally.

Re: OpenAI CEO Sam Altman sent startup six-figure loan after SVB collapse

#13

Post by PeterisP »

sql-spy wrote: post #9
warent wrote: post #3

Earlier quoted context omitted.

I don't really know much about venture capital but this sounds like a gross oversimplification. More like, the startups that are saved will be a mixed bag of worthwhile startups and dead-end startups. Meanwhile some worthwhile ones will sadly be left behind with the dead-end ones.

Ofcourse it is an oversimplification but it really is that simple. If the business is profitable, it will survive. If its still relying on free money to pay the bills, its time to make it profitable.

The fact whether a startup has positive cashflow or not isn't really reflective of whether that is a worthwhile startup or a bad one, but rather whether it's at an early stage or a relatively mature one.

The most bestest startup in the world would still be relying on investor's money to pay the bills if it's just starting to build its product and the time to make it profitable will come in a year or two or more (e.g. a biotech startup can take many, many years until the product gets approved for patients and earns its first cent).

Yes, if a business has "grown up" from being a startup and is fully self-funding not only its operations but also its growth, then it will survive, but the definition of a startup is something that's still trying to reach that stage and isn't there yet.

Re: OpenAI CEO Sam Altman sent startup six-figure loan after SVB collapse

#14

Post by ralph84 »

brunooo wrote: post #4

One of those rare opportunities to clearly assess VCs from the outside, and surprisingly good steady reaction by him and Khosla. Who else?

Khosla’s legacy is trying to privatize public beaches. Nothing he does will make people forget that.

Re: OpenAI CEO Sam Altman sent startup six-figure loan after SVB collapse

#15

Post by swatcoder »

wpietri wrote: post #5
warent wrote: post #3

Earlier quoted context omitted.

I don't really know much about venture capital but this sounds like a gross oversimplification. More like, the startups that are saved will be a mixed bag of worthwhile startups and dead-end startups. Meanwhile some worthwhile ones will sadly be left behind with the dead-end ones.

Depends on your perspective. One of the articles of faith in this industry is that good startups get investment and succeed, while bad ones fail. To whatever extent that's true, it won't be particularly worse here. Startups who made treasury management errors and are experiencing cash crunches can make very good cases for bridge loans and extra investment from their existing investors. If their investors are like, "n…

> One of the articles of faith in this industry is that good startups get investment and succeed, while bad ones fail.

Is it? I thought it was that startups with exciting books and good networks get a chance to ratchet into the next round of funding.

Great startups drown all the time for not being a VC rocketship, when they they could have grow into a perfectly successful cruiseliner under traditional fundraising or bootstrapping.

If investors are “nah pass”, it’s more about making a quick decision about near-term finance opportunities than the mid-term or long-term strength of the underlying business. VC investors inherently care more about 10x exits than sound business practices.

Re: OpenAI CEO Sam Altman sent startup six-figure loan after SVB collapse

#16

Post by rdl »

gfsdgsfgfds wrote: post #12

Just one anecdote of many. I'm a founder of a bootstrapped startup. We are/were with SVB. On Thursday I tried to get a Brex cash account setup to move some operational cash there but it didn't happen in time. I thought of wiring money out of SVB to my personal account but decided it felt too dodgy. Payroll for 2 weeks ending March 15th had to be funded through Gusto by tomorrow (March 13th). So I did all I could do w…

Not a lawyer, but I would be pretty comfortable with SVB -> personal account if you documented why and communicated about it in advance with board/counsel. (Obviously the next step would be opening a Chase/etc. account and sending the funds on to that, not using your personal account for company business on an ongoing basis, but a limited number of emergency transactions should be fine.)

Re: OpenAI CEO Sam Altman sent startup six-figure loan after SVB collapse

#17

Post by breck »

gfsdgsfgfds wrote: post #12

Just one anecdote of many. I'm a founder of a bootstrapped startup. We are/were with SVB. On Thursday I tried to get a Brex cash account setup to move some operational cash there but it didn't happen in time. I thought of wiring money out of SVB to my personal account but decided it felt too dodgy. Payroll for 2 weeks ending March 15th had to be funded through Gusto by tomorrow (March 13th). So I did all I could do w…

Your 2 week payroll is more than $250,000 and you are bootstrapped?

I call B.S.

Something doesn't add up. Coming from an anon account no less.

Re: OpenAI CEO Sam Altman sent startup six-figure loan after SVB collapse

#18

Post by Waterluvian »

rdl wrote: post #16
gfsdgsfgfds wrote: post #12

Just one anecdote of many. I'm a founder of a bootstrapped startup. We are/were with SVB. On Thursday I tried to get a Brex cash account setup to move some operational cash there but it didn't happen in time. I thought of wiring money out of SVB to my personal account but decided it felt too dodgy. Payroll for 2 weeks ending March 15th had to be funded through Gusto by tomorrow (March 13th). So I did all I could do w…

Not a lawyer, but I would be pretty comfortable with SVB -> personal account if you documented why and communicated about it in advance with board/counsel. (Obviously the next step would be opening a Chase/etc. account and sending the funds on to that, not using your personal account for company business on an ongoing basis, but a limited number of emergency transactions should be fine.)

Isn’t it generally a cardinal sin of business finance though?

Re: OpenAI CEO Sam Altman sent startup six-figure loan after SVB collapse

#19

Post by gfsdgsfgfds »

breck wrote: post #17
gfsdgsfgfds wrote: post #12

Just one anecdote of many. I'm a founder of a bootstrapped startup. We are/were with SVB. On Thursday I tried to get a Brex cash account setup to move some operational cash there but it didn't happen in time. I thought of wiring money out of SVB to my personal account but decided it felt too dodgy. Payroll for 2 weeks ending March 15th had to be funded through Gusto by tomorrow (March 13th). So I did all I could do w…

Your 2 week payroll is more than $250,000 and you are bootstrapped? I call B.S. Something doesn't add up. Coming from an anon account no less.

It is not. SVB account is frozen. Nothing in or out. Wire had to land March 13th so had to be sent Friday.

Re: OpenAI CEO Sam Altman sent startup six-figure loan after SVB collapse

#20

Post by dgacmu »

gfsdgsfgfds wrote: post #12

Just one anecdote of many. I'm a founder of a bootstrapped startup. We are/were with SVB. On Thursday I tried to get a Brex cash account setup to move some operational cash there but it didn't happen in time. I thought of wiring money out of SVB to my personal account but decided it felt too dodgy. Payroll for 2 weeks ending March 15th had to be funded through Gusto by tomorrow (March 13th). So I did all I could do w…

For others who might be in the same position, it might be worth contacting your payroll processor. Ours, justworks, indicated that we could wire them the money on the invoice processing day and still make payroll. (That will be either Monday or Tuesday, I forget which - we somehow got really lucky; our payroll ACH got pulled right before the shutdown)
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