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TechCrunch is currently. Busy reporting the hell out of the SVB crisis, but while we tackle the competitive landscape and learn more about how founders and their VC partners are responding, I have a question: How are startups going to pay for things when the chaos settles?
According to the government, “insurance depositors” in SVB will be able to access their insurance proceeds in full after Monday morning. That’s good, because some capital will be available to some SVB clients in short order. The issue is that the FDIC only insures a maximum of $250,000 per account.
This crisis is going to kill many startups by adding enough operational friction to quickly or easily bring them to their knees.
Of course, for the average person with a lot of money. But not for a startup that needs to pay a salary.
And the salary is right one Cost. What about paying cloud providers? Software vendors? Partners? Handling refunds for services and products? Any use of funds would now be impossible for startups that had a material percentage of their SVB capital.
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