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I don’t understand how VC funds can be in the billions and yet outsiders must assume they do not know anything about: 1. bank failures in the US in the last 100
by favflam 4y ago
I don’t understand how VC funds can be in the billions and yet outsiders must assume they do not know anything about:
1. bank failures in the US in the last 100 years
2. deposits being on a bank’s balance sheet, hence the terms credit and debit cards
3. creditor subordination in event of default
Believing #3 especially makes no sense to me given the liquidity preference clauses I hear VCs have been writing into investment agreements with startups over the last few years.
These two realities, naive depositor and liquidity preferenced multi-billion dollar VCs, do not square up in my head.
FDIC protects naive depositors, not sophisticated financial professionals entrusted with billions of dollars of investment funds.
- Hermitian909 4y ago> I don’t understand how VC funds can be in the billions and yet outsiders must assume they do not know anything about: 1. bank failures in the US in the last 100 years 2. deposits being on a bank’s balance sheet, hence the terms credit and debit cards 3. creditor subordination in event of default Without offering judgment: VCs are concerned with many things that can kill the companies in their portfolio across multiple different verticals. I would assume a big part of how this happened is that of all the things that could kill their returns, banks were low enough on the list that they weren't regularly thinking about it. IMO there's a legitimate question about whether we believe it's good for one of the things VCs have to consider is bank failure risk as it will necessarily take attention away from other concerns more related to business and innovation.