Debunking a popular aphorism is a ploy by professors to spark a technical discussion. Debunking a popular aphorism is a ploy by professors to spark a technical discussion.
Banking regulators said Sunday night that depositors at Silicon Valley Bank, which closed on Friday, would have access to their funds on Monday, allaying concerns that Startups will struggle to pay their employees this week. The bank closures followed a rate hike that hurt start-ups and failed fundraising efforts, spurring deposit withdrawals.
While relief can be felt, there are still questions about the funding environment for startups, which have had to rely on Silicon Valley Bank to back up unbanked businesses. proof that the bigger banks stay away. And the bank has yet to find a buyer on Sunday, which is the hope of many venture capital firms and tech founders hungry for positive news.
“This is a huge step forward in restoring trust in the startup community. In the wake of this move, many startups have been planning emergency measures that could potentially lead to layoffs and furloughs. Jon Sakoda, founder of early-stage venture capital firm Decibel Partners, said the actions have provided much-needed certainty that everyone can get a paycheck on Monday.
The sudden bank closure sent chills through Silicon Valley amid another bleak period marked by tech layoffs and spending cuts as consumers tighten their wallets. Company executives, many of whom have deposited all their money in Silicon Valley Bank, took to Twitter and other social media networks to plead for relief.
Sam Altman, head of OpenAI, known for its ChatGPT artificial intelligence software, was among those who answered the call, providing emergency funding to startups to help overcome the uncertainty. sure and pay their employees, Reuters reported on Sunday.
Tech investor Asheesh Birla has spent the past three days working nonstop, advising companies on how to calculate salaries or urging people to call their local politician. He was pleased with the federal government’s decision to block the deposits but not make the bank’s equity holders total, he said.
“Companies never have to worry about whether their deposits are safe,” he said.
A joint statement on Sunday by US government agencies including the Treasury Department and the Federal Reserve said taxpayers will not bear any costs related to the new plans surrounding the Bank. Silicon Valley. However, shareholders and some unsecured creditors will not receive the same protection.
Birla predicts that in the next few days, startups will massively open accounts at major banks. And for companies that hold significant amounts of cash, he thinks there will be increased interest in hiring treasurers, who will work to reduce the amount of cash that companies are holding at the office. any time.
Silicon Valley Bank has by far been a more reliable source of funding for startups than other banks.
Doktor Gurson, CEO of Rad AI, said the news represents a “collective sigh of relief” after days of worry about how to pay the startup with about 65 of its employees. . “Honestly, I lost several years of my life over the weekend. It’s a bit of a roller coaster.
However, the story is far from over. Even if Rad AI plans to move funds to new accounts at larger banks, he said, exactly when it will be able to access all of its SVB funds remains unclear.
“I don’t know where it’s safe to go,” he said. “I’m still a little worried about what might happen.”
He added, “We still need to evaluate what we’re doing going forward.”