35 ms·

Its so funny until you realize your seed-round investment in a friends company used SVB. Gonna be quite a show, this.

by banku_brougham 4y ago

idlewords 4y ago
That makes it even funnier, though. At least to the rest of us.
- loeg 4y ago
  Not now, Maciej.
  - idlewords 4y ago
    Literally no better time than now.
    - loeg 4y ago
      If it's all downhill from here, then I guess it will never be funny. You don't speak for "the rest of us."
      - uoaei 4y ago
        Sounds like someone needs a little "kill your heroes"-ing.
  - pwinnski 4y ago
    Counterpoint: Now and always, as many times as it takes.
  - nvr219 4y ago
    lol
- baggy_trough 4y ago
  You really have to be a tremendous shit to say this out loud, even if it's how you feel.
  - eggsmediumrare 4y ago
    Rich techies losing money and having to sell one of their houses is pretty funny. Regular people missing mortgage payments is not funny.
sophacles 4y ago
Isn't the investor justification for taking a huge chunk of profits "we take risk"? I fail to see how this is unfunny just because the risk you took played out in the bad way.
- dannyw 4y ago
  More people will lose jobs.
- serial_dev 4y ago
  I believe they didn't think that the biggest risk to their investment would be the bank the co-founders chose.
  - recursive 4y ago
    Perhaps it wasn't the biggest risk at the time. Still a risk though.
FormerBandmate 4y ago
Tons of VCs had their assets there too. It could lead to serious ramifications, anyone with substantially more than $250k in that bank is out a lot and only time will tell how much they’ll be able to recoup. It’s not an FTX situation, the assets are somewhat there, but the losses in securities look extreme and unwinding them at a fair price may take months, if not years
- shawabawa3 4y ago
  It is actually exactly an FTX situation Not as extreme maybe, and less fraud got us here, but $assets < $deposits
  - cowmoo728 4y ago
    There is a very large difference between FTX and SVB. The people behind FTX will probably go to jail because they committed crimes and effectively stole money. SVB mismanaged interest rate risk and ended up on the wrong side of interest rate hikes. They had similar results of people quickly trying to pull all their money out, but it's not "exactly an FTX situation".
    - blibble 4y ago
      no bank on earth can survive every depositor turning up at once and demanding their money whereas an exchange shouldn't have a position at all and a hedge fund normally doesn't allow withdrawals at all (without vast notice)
      - freejazz 4y ago
        Well, people didn't show up to demand their money for no reason.
  - hef19898 4y ago
    My reading is that the long term book value of those assets is bigger than the deposits. And now that the deposits are withdrawn, SVB ahs to liquidate thise assets at current market value, which is (maybe?) lower than deposits. So, at the least, it looks like a strange risk management approach on behalf of SVB. And those clients that kept most of their money at this one, single bank.
berkle4455 4y ago
They’ll most likely be made whole or close to whole. It’ll just take time, so as long as that startup doesn’t have a huge burn already, should be fine. Anyway you bought % in their company which you still own, the cash was gone when you wired it.
- sroussey 4y ago
  Large burn? You mean any burn at all… Money there to to be spent over the next six months is now not available. Payroll in Silicon Valley is going to be a mess this week. Companies that lend to startups short term are going to have a busy time.
  - berkle4455 4y ago
    [deleted]
    - lmeyerov 4y ago
      Yep traditional advice is don't burn > 100k / mo when early stage, and most lower. So 2mo+ payroll fine for a normal seed, early A. Later stage are normally more sensitive. It's also a real issue with profitable companies whose outflows are at that level and are considering bigger purchases -- I'd be bailing if we were there just bc that. Except the last couple years have been bonkers with little revenue / spending alignment during fundraising. Early stage burns are above that level, which makes the situation worse for current crop of co's. Ouch and good luck :(
  - berkle4455 4y ago
    For sure. The post I was replying to was for a seed stage company though. They’ve got $250k secured by Monday. My point was small firms can meet payroll and bills just fine with only $250k
    - sroussey 4y ago
      Sure, pre-seed. Seed is usually $2m-5m these days, and received all at once (mostly) as compared to VCs which do capital calls.

Its so funny until you realize your seed-round investment in a friends company used SVB. Gonna be quite a show, this.

idlewords 4y ago

That makes it even funnier, though. At least to the rest of us.

loeg 4y ago
Not now, Maciej.
- idlewords 4y ago
  Literally no better time than now.
  - loeg 4y ago
    If it's all downhill from here, then I guess it will never be funny. You don't speak for "the rest of us."
    - uoaei 4y ago
      Sounds like someone needs a little "kill your heroes"-ing.
- pwinnski 4y ago
  Counterpoint: Now and always, as many times as it takes.
- nvr219 4y ago
  lol
baggy_trough 4y ago
You really have to be a tremendous shit to say this out loud, even if it's how you feel.
- eggsmediumrare 4y ago
  Rich techies losing money and having to sell one of their houses is pretty funny. Regular people missing mortgage payments is not funny.

sophacles 4y ago

Isn't the investor justification for taking a huge chunk of profits "we take risk"? I fail to see how this is unfunny just because the risk you took played out in the bad way.

dannyw 4y ago
More people will lose jobs.
serial_dev 4y ago
I believe they didn't think that the biggest risk to their investment would be the bank the co-founders chose.
- recursive 4y ago
  Perhaps it wasn't the biggest risk at the time. Still a risk though.

FormerBandmate 4y ago

Tons of VCs had their assets there too. It could lead to serious ramifications, anyone with substantially more than $250k in that bank is out a lot and only time will tell how much they’ll be able to recoup. It’s not an FTX situation, the assets are somewhat there, but the losses in securities look extreme and unwinding them at a fair price may take months, if not years

shawabawa3 4y ago
It is actually exactly an FTX situation Not as extreme maybe, and less fraud got us here, but $assets < $deposits
- cowmoo728 4y ago
  There is a very large difference between FTX and SVB. The people behind FTX will probably go to jail because they committed crimes and effectively stole money. SVB mismanaged interest rate risk and ended up on the wrong side of interest rate hikes. They had similar results of people quickly trying to pull all their money out, but it's not "exactly an FTX situation".
  - blibble 4y ago
    no bank on earth can survive every depositor turning up at once and demanding their money whereas an exchange shouldn't have a position at all and a hedge fund normally doesn't allow withdrawals at all (without vast notice)
    - freejazz 4y ago
      Well, people didn't show up to demand their money for no reason.
- hef19898 4y ago
  My reading is that the long term book value of those assets is bigger than the deposits. And now that the deposits are withdrawn, SVB ahs to liquidate thise assets at current market value, which is (maybe?) lower than deposits. So, at the least, it looks like a strange risk management approach on behalf of SVB. And those clients that kept most of their money at this one, single bank.

berkle4455 4y ago

They’ll most likely be made whole or close to whole. It’ll just take time, so as long as that startup doesn’t have a huge burn already, should be fine. Anyway you bought % in their company which you still own, the cash was gone when you wired it.

sroussey 4y ago
Large burn? You mean any burn at all… Money there to to be spent over the next six months is now not available. Payroll in Silicon Valley is going to be a mess this week. Companies that lend to startups short term are going to have a busy time.
- berkle4455 4y ago
  [deleted]
  - lmeyerov 4y ago
    Yep traditional advice is don't burn > 100k / mo when early stage, and most lower. So 2mo+ payroll fine for a normal seed, early A. Later stage are normally more sensitive. It's also a real issue with profitable companies whose outflows are at that level and are considering bigger purchases -- I'd be bailing if we were there just bc that. Except the last couple years have been bonkers with little revenue / spending alignment during fundraising. Early stage burns are above that level, which makes the situation worse for current crop of co's. Ouch and good luck :(
- berkle4455 4y ago
  For sure. The post I was replying to was for a seed stage company though. They’ve got $250k secured by Monday. My point was small firms can meet payroll and bills just fine with only $250k
  - sroussey 4y ago
    Sure, pre-seed. Seed is usually $2m-5m these days, and received all at once (mostly) as compared to VCs which do capital calls.