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I think there are a variety of products reducing cash risk to zero. Something like t-bill positions for overdraft protection might be one such. But notice tha

I think there are a variety of products reducing cash risk to zero. Something like t-bill positions for overdraft protection might be one such. But notice that it's not in the bank's interest to provide them or push them if they do. They would rather you trust them and provide them the cheap float.

tome 4y ago
Yeah, this seems to be what I'm learning from https://twitter.com/WallStCynic/status/1634901599423197191 https://twitter.com/WallStCynic/status/1634901599423197191 Perhaps some near-fraudulent collusion between SVB, VCs and the executives of the banked startups then ...
- chernevik 4y ago
  I think the story of the relationships between SVB and the VCs would be fascinating. Less so the executives, who probably did largely as their investors advise. Their individual business probably isn't that important on its own. It's the VC partner who sees to it that 10 portfolio companies a year drop their capital raise into cheap deposits who really mattered.
  - tome 4y ago
    That thread seems to be insinuating that startup executives were offered mortgages in return for keeping their treasury as deposits in SVB. If so that sounds like a massive violation of fiduciary duty. (I don't have any concrete evidence of this and I'm just going by one Twitter thread I've read, so take with a mountain of salt.)
    - querulous 4y ago
      i don't think it's as nefarious as that the issue is that startup founders might have a lot of implied wealth based on the equity they hold and money raised but a "mainstream" bank is going to look at that equity, assess it as non-liquid and highly speculative and reject any loan applications svb was more likely to extend personal loans to startup founders because -- in theory at least -- they better understood startup finance and they were incentivized to provide good service to prospective customers of their more business focused activities
      - tome 4y ago
        Yes, that makes sense. Perhaps I was too cynical.

tome 4y ago

Yeah, this seems to be what I'm learning from https://twitter.com/WallStCynic/status/1634901599423197191 https://twitter.com/WallStCynic/status/1634901599423197191 Perhaps some near-fraudulent collusion between SVB, VCs and the executives of the banked startups then ...

chernevik 4y ago
I think the story of the relationships between SVB and the VCs would be fascinating. Less so the executives, who probably did largely as their investors advise. Their individual business probably isn't that important on its own. It's the VC partner who sees to it that 10 portfolio companies a year drop their capital raise into cheap deposits who really mattered.
- tome 4y ago
  That thread seems to be insinuating that startup executives were offered mortgages in return for keeping their treasury as deposits in SVB. If so that sounds like a massive violation of fiduciary duty. (I don't have any concrete evidence of this and I'm just going by one Twitter thread I've read, so take with a mountain of salt.)
  - querulous 4y ago
    i don't think it's as nefarious as that the issue is that startup founders might have a lot of implied wealth based on the equity they hold and money raised but a "mainstream" bank is going to look at that equity, assess it as non-liquid and highly speculative and reject any loan applications svb was more likely to extend personal loans to startup founders because -- in theory at least -- they better understood startup finance and they were incentivized to provide good service to prospective customers of their more business focused activities
    - tome 4y ago
      Yes, that makes sense. Perhaps I was too cynical.