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Is there any point to this comment other than snarkily signaling contempt for anything to do with Silicon Valley? Do you have any thoughts about what nascent s

Is there any point to this comment other than snarkily signaling contempt for anything to do with Silicon Valley? Do you have any thoughts about what nascent startups should have done with respect to banking when other banks wouldn’t help them?

aaomidi 4y ago
What banks are saying no to money?
- tomhoward 4y ago
  Plenty of banks will refuse to do business with, or impose onerous conditions on, companies with such characteristics as: - founders from outside the U.S. or from certain countries - operations/investments in certain countries - operations in certain industries/market segments (including ones that are completely legal but are considered high-risk) - founders/directors with previous bankruptcies/insolvencies or any criminal history - activities anywhere near any legal grey areas or risks including things like cannabis or hallucinogenic substance sales/research even if legal in the company’s region of operations Those come to mind now but I’m sure there are others. It’s not just about accepting deposits but offering lines of credit, credit cards even with low balances, international transfers, insurance and other services crucial to the smooth functioning of a company. Banks are inherently risk averse, and mainstream banks just don’t have the expertise or resources to look at startups and evaluate their risk profile, so will just refuse service based on anything slightly outside very narrow safety criteria. Silicon Valley Bank is a bank too and still has to be quite conservative, but has been far more willing to do the work to accommodate the more risky/unconventional aspects inherent to startups. A low-quality take is that if a company is in any way suspect it doesn’t deserve to be in business, but that position just wipes out swathes of innovation, research and wealth creation, and leads to a scenario where only people who are already rich (and American) can start startups.

aaomidi 4y ago

What banks are saying no to money?

tomhoward 4y ago
Plenty of banks will refuse to do business with, or impose onerous conditions on, companies with such characteristics as: - founders from outside the U.S. or from certain countries - operations/investments in certain countries - operations in certain industries/market segments (including ones that are completely legal but are considered high-risk) - founders/directors with previous bankruptcies/insolvencies or any criminal history - activities anywhere near any legal grey areas or risks including things like cannabis or hallucinogenic substance sales/research even if legal in the company’s region of operations Those come to mind now but I’m sure there are others. It’s not just about accepting deposits but offering lines of credit, credit cards even with low balances, international transfers, insurance and other services crucial to the smooth functioning of a company. Banks are inherently risk averse, and mainstream banks just don’t have the expertise or resources to look at startups and evaluate their risk profile, so will just refuse service based on anything slightly outside very narrow safety criteria. Silicon Valley Bank is a bank too and still has to be quite conservative, but has been far more willing to do the work to accommodate the more risky/unconventional aspects inherent to startups. A low-quality take is that if a company is in any way suspect it doesn’t deserve to be in business, but that position just wipes out swathes of innovation, research and wealth creation, and leads to a scenario where only people who are already rich (and American) can start startups.