SVB’s Demise and the Betrayal of the Tech Startup Ecosystem: How We Lost a Bank of Our Own in less than 48 Hours!
Three years ago, when COVID came in March 2020, it came slowly. We didn’t lose faith on day one because we didn’t know how bad it will be. Last week’s SVB’s demise was like an earthquake that shook the whole industry within hours, not only shuddering the confidence in public financial institutions but also in our own tech startup ecosystem.
SVB gave the tech startup industry — 40 years of dedicated services and we could not give them 40 hours! I’m sad, angry, and almost in disbelief. I’m also a bit disgusted by our tech start-up ecosystem.
We had a bank of our OWN. We didn’t have to share banks with massive companies like MS, or amazon. We got custom-made packages for startups. We had events/ initiatives fussed on startups and we gutted it all in less than 48 hours!
I don’t need to be a guru in the financial ecosystem, but I know it was a frenzy that brought a legitimate bank to its knees in hours! All I know is they had over $200 billion in assets and were looking to raise $2 Billion — 1% of their assets! I’m sure there is more to this story, but the bottom line is we didn’t even give them a chance.
And what we don’t realize is that we, as a tech startup industry, just shot ourselves in the foot. Literally, 45 minutes before the collapse I got an email from my contact at SVB that they were SOLID. And then they were gone! POOF!
When big VCs send out an email to their portfolio companies asking them to withdraw funds, did they not think that email will go to EVERY founder’s mailbox in the US? Founders don’t have time to socialize; their only friends are other over-worked, mentally exhausted, and sleep-deprived founders. And they all sympathize with each other on the hardships of a startup journey. When one gets a cautionary email, they will share it with their network of other startups, Then their network will share with their network, and it will become a chain reaction in a matter of hours.
It was like a stampede caused by someone calling a stampede, which became a self-fulfilling prophecy.
Can you imagine the ripple effect of this? Most VCs will be saving their big investments first — most likely series A and beyond. Because if they don’t — they will be looking at much bigger losses. They will save their favorite child first as the plane is going down.
This means that much smaller seed and pre-seed stage companies will die. It can be due to stuck funds at SVB but more importantly VCs not writing new checks now for some time.
As a female-founded company, it was already a monumental task to raise funds. I sound like a broken record saying, “less than 2% VC funding goes to female founders, blah blah blah….”. Now what?
Honestly, I’m tired of working nonstop 80 hours a week. I’m tired of dealing with rejection. I’m tired of missing out on my kids’ lives.
How much more shit can I deal with as a founder?
Today I feel like I’m disappearing from this planet — just like in Marvel movie Averages: Infinite Wars. It feels like, just like Thanos, our tech startup system snapped its fingers and decided to make half of the startups disappear.
Hug a founder today — because they may disappear tomorrow!