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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 th
by JumpinJack_Cash 4y ago
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.
- ak_111 4y agoIt is a great idea in a 0% interest world, SVB's stock price went from $24 in 2010 to $710 in 2020.
- JumpinJack_Cash 4y agoBanks are tech companies now? Add them to the list lol
- deleted 4y ago[deleted]
- blitzar 4y agoIt 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.
- JumpinJack_Cash 4y agoI am not sold on deposits rising overall because startups die a lot and the few homeruns will quickly dump you for Morgan Stanley or JPM as soon as they make it big. But even if deposits rise how are you going to propel the money multiplier considering that your customer base doesn’t need loans? Startups are notoriously scared of any debt/loan