Will The Silicon Valley Bank Collapse Affect Your Startup?

And we are live. Welcome to this fun And we are live. Welcome to this fun live stream from Microcom, Tiny Seed live stream from Microcom, Tiny Seed live stream from Microcom, Tiny Seed about how will the Silicon Valley Bank about how will the Silicon Valley Bank about how will the Silicon Valley Bank collapse collapse affect startups. I'm collapse collapse affect startups. I'm collapse collapse affect startups. I'm Rob Walling, co-founder of Microcom and Rob Walling, co-founder of Microcom and Rob Walling, co-founder of Microcom and Tiny Seed, host of your favorite podcast Tiny Seed, host of your favorite podcast Tiny Seed, host of your favorite podcast about startups called Startup for the about startups called Startup for the about startups called Startup for the Rest of Us. And this gentleman joining Rest of Us. And this gentleman joining Rest of Us. And this gentleman joining me from Austin, Texas, South by me from Austin, Texas, South by me from Austin, Texas, South by Southwest, is Anar Vulset. Anar, intro Southwest, is Anar Vulset. Anar, intro Southwest, is Anar Vulset. Anar, intro yourself. yourself. yourself. Yes, my name is Anar Volset. I am a Yes, my name is Anar Volset. I am a Yes, my name is Anar Volset. I am a partner and co-founder of Tiny Seed partner and co-founder of Tiny Seed partner and co-founder of Tiny Seed and we received over the weekend since and we received over the weekend since and we received over the weekend since Friday I've received a lot of outreach Friday I've received a lot of outreach Friday I've received a lot of outreach uh asking our opinions on um you know to uh asking our opinions on um you know to uh asking our opinions on um you know to be honest before yesterday afternoon be honest before yesterday afternoon be honest before yesterday afternoon when essentially you know it was when essentially you know it was when essentially you know it was announced that depositors would be made announced that depositors would be made announced that depositors would be made whole um as needed by the Federal whole um as needed by the Federal whole um as needed by the Federal Reserve we got a lot of questions about Reserve we got a lot of questions about Reserve we got a lot of questions about how what should I do next you know how how what should I do next you know how how what should I do next you know how should I react I think the conversation should I react I think the conversation should I react I think the conversation today is both It's different than it today is both It's different than it today is both It's different than it would have been yet 24 hours ago before would have been yet 24 hours ago before would have been yet 24 hours ago before that happened, right? But it's also um that happened, right? But it's also um that happened, right? But it's also um there's still a lot of questions. We're there's still a lot of questions. We're there's still a lot of questions. We're gonna talk a little bit about what gonna talk a little bit about what gonna talk a little bit about what happened. I think most people probably happened. I think most people probably happened. I think most people probably know that, so we'll skip through it. Um know that, so we'll skip through it. Um know that, so we'll skip through it. Um talk about maybe a little bit of our own talk about maybe a little bit of our own talk about maybe a little bit of our own experience dealing with it and and then experience dealing with it and and then experience dealing with it and and then talk about uh you know, looking ahead talk about uh you know, looking ahead talk about uh you know, looking ahead like like like you know talk about there's a lot of you know talk about there's a lot of you know talk about there's a lot of conversation around was it a bailout or conversation around was it a bailout or conversation around was it a bailout or not as well as advice and actions to not as well as advice and actions to not as well as advice and actions to take moving forward to kind of ensure take moving forward to kind of ensure take moving forward to kind of ensure your financial safety. Y your financial safety. Y your financial safety. Y I think the one question that we had in I think the one question that we had in I think the one question that we had in the outline is like why are we uniquely the outline is like why are we uniquely the outline is like why are we uniquely suited to talk about this? What do you

suited to talk about this? What do you suited to talk about this? What do you think Anar? think Anar? think Anar? Oh just because a ton of our money Oh just because a ton of our money Oh just because a ton of our money was stuck in the SVB and we were was stuck in the SVB and we were was stuck in the SVB and we were panicking maybe. So so we dug into panicking maybe. So so we dug into panicking maybe. So so we dug into specifically what and we saw like you specifically what and we saw like you specifically what and we saw like you know we're connected to I mean obviously know we're connected to I mean obviously know we're connected to I mean obviously like a lot of this was tied to VCs and like a lot of this was tied to VCs and like a lot of this was tied to VCs and you know we are VCs and you know we are VCs and you know we are VCs and we saw a lot of the behind the scenes we saw a lot of the behind the scenes we saw a lot of the behind the scenes machinations going down uh over the machinations going down uh over the machinations going down uh over the weekend and last week. Um so yeah so we weekend and last week. Um so yeah so we weekend and last week. Um so yeah so we we sort of lived it. We definitely had we sort of lived it. We definitely had we sort of lived it. We definitely had funds above 250, you know, per EIN in funds above 250, you know, per EIN in funds above 250, you know, per EIN in SVB and and we we over the weekend there SVB and and we we over the weekend there SVB and and we we over the weekend there was a lot of panic about, you know, what was a lot of panic about, you know, what was a lot of panic about, you know, what does this mean? What do we do now? Uh does this mean? What do we do now? Uh does this mean? What do we do now? Uh what are the contingency plans, you what are the contingency plans, you what are the contingency plans, you know, and and and partly like why did know, and and and partly like why did know, and and and partly like why did this happen, this happen, this happen, right? And it's interesting when you, right? And it's interesting when you, right? And it's interesting when you, you know, if I didn't have money on the you know, if I didn't have money on the you know, if I didn't have money on the line, it just when you have money on the line, it just when you have money on the line, it just when you have money on the line, it makes you really dig into line, it makes you really dig into line, it makes you really dig into things and learn about them and follow things and learn about them and follow things and learn about them and follow it closely and really get into the it closely and really get into the it closely and really get into the details, you know. for sure. details, you know. for sure. details, you know. for sure. So, obviously, you know, disclaimer, So, obviously, you know, disclaimer, So, obviously, you know, disclaimer, this is not financial or legal advice at this is not financial or legal advice at this is not financial or legal advice at all. It's just two people talking on the all. It's just two people talking on the all. It's just two people talking on the internet about some stuff that we internet about some stuff that we internet about some stuff that we two opinionated dudes. Yeah.

two opinionated dudes. Yeah. two opinionated dudes. Yeah. Yeah. Exactly. Um, if you have Yeah. Exactly. Um, if you have Yeah. Exactly. Um, if you have questions, we already have a few questions, we already have a few questions, we already have a few questions that have come in on Twitter, questions that have come in on Twitter, questions that have come in on Twitter, uh, via YouTube, and via Micro Connect. uh, via YouTube, and via Micro Connect. uh, via YouTube, and via Micro Connect. But feel free to ask them, uh, in the But feel free to ask them, uh, in the But feel free to ask them, uh, in the YouTube chat, and producer Ron will put YouTube chat, and producer Ron will put YouTube chat, and producer Ron will put them in our doc. So to kick us off, Anar them in our doc. So to kick us off, Anar them in our doc. So to kick us off, Anar two-minute recap like what happened and two-minute recap like what happened and two-minute recap like what happened and what like why did this happen so fast what like why did this happen so fast what like why did this happen so fast and really what was the sequence of and really what was the sequence of and really what was the sequence of events? Why did why did SVB fail? events? Why did why did SVB fail? events? Why did why did SVB fail? So So this is um basically a a what the So So this is um basically a a what the So So this is um basically a a what the first like social networking bank run first like social networking bank run first like social networking bank run collapse effectively is what happened. collapse effectively is what happened. collapse effectively is what happened. So the the technical reason that kicked So the the technical reason that kicked So the the technical reason that kicked it off in the first place is is kind of it off in the first place is is kind of it off in the first place is is kind of boring and I think a lot of people don't boring and I think a lot of people don't boring and I think a lot of people don't fully understand it. they sort of, you fully understand it. they sort of, you fully understand it. they sort of, you know, the headlines are like they took know, the headlines are like they took know, the headlines are like they took super risky bets and then they lost all super risky bets and then they lost all super risky bets and then they lost all their money and now they're getting their money and now they're getting their money and now they're getting bailed out which sort of not not really bailed out which sort of not not really bailed out which sort of not not really true for first of all nobody an equity true for first of all nobody an equity true for first of all nobody an equity holder or employee at SVB is getting holder or employee at SVB is getting holder or employee at SVB is getting bailed out um you know and um so so bailed out um you know and um so so bailed out um you know and um so so that's a that's a big change but that's a that's a big change but that's a that's a big change but fundamentally what happened was so VC's fundamentally what happened was so VC's fundamentally what happened was so VC's Silicon Valley Bank was the largest bank Silicon Valley Bank was the largest bank Silicon Valley Bank was the largest bank for VCs and startups and as everyone for VCs and startups and as everyone for VCs and startups and as everyone knows in like 2020 and 2021 like a lot knows in like 2020 and 2021 like a lot knows in like 2020 and 2021 like a lot of like these startups and VCs raise a of like these startups and VCs raise a of like these startups and VCs raise a lot of money and most of the time they lot of money and most of the time they lot of money and most of the time they put their money in SVB for you know put their money in SVB for you know put their money in SVB for you know structural reasons basically it was the structural reasons basically it was the structural reasons basically it was the default gold standard bank to put your default gold standard bank to put your default gold standard bank to put your money in. So from SVB's perspective, money in. So from SVB's perspective, money in. So from SVB's perspective, what they then did, the mistake that

what they then did, the mistake that what they then did, the mistake that that triggered this whole thing was, oh, that triggered this whole thing was, oh, that triggered this whole thing was, oh, usually what they do with these deposits usually what they do with these deposits usually what they do with these deposits are they don't they don't gamble them on are they don't they don't gamble them on are they don't they don't gamble them on like, you know, super risky assets. like, you know, super risky assets. like, you know, super risky assets. They're just looking to get, you know, They're just looking to get, you know, They're just looking to get, you know, some return um on deposits. And so what some return um on deposits. And so what some return um on deposits. And so what they used to be doing was buying they used to be doing was buying they used to be doing was buying governmentbacked governmentbacked governmentbacked uh short duration, so like a year-long uh short duration, so like a year-long uh short duration, so like a year-long bonds. Um, and they were doing that, but bonds. Um, and they were doing that, but bonds. Um, and they were doing that, but then in 20 I think in 2020 or 2021, for then in 20 I think in 2020 or 2021, for then in 20 I think in 2020 or 2021, for whatever reason, they started to instead whatever reason, they started to instead whatever reason, they started to instead of buying bonds that were one-year of buying bonds that were one-year of buying bonds that were one-year expiration, they started to buy them expiration, they started to buy them expiration, they started to buy them that were doing like 10-year expiration. that were doing like 10-year expiration. that were doing like 10-year expiration. Um, Um, Um, yeah. So, they were baser yeah. So, they were baser yeah. So, they were baser your duration of your bond, if interest your duration of your bond, if interest your duration of your bond, if interest rates change, when interest rates go up, rates change, when interest rates go up, rates change, when interest rates go up, your bond values drop. your bond values drop. your bond values drop. Yeah. So, the challenge Yeah. The Yeah. So, the challenge Yeah. The Yeah. So, the challenge Yeah. The challenge became basically like they had challenge became basically like they had challenge became basically like they had 10 year 10-year bonds with like 1.6 six% 10 year 10-year bonds with like 1.6 six% 10 year 10-year bonds with like 1.6 six% interest in an interest rate environment interest in an interest rate environment interest in an interest rate environment where you know now you can get four and where you know now you can get four and where you know now you can get four and a half five percent guaranteed from the a half five percent guaranteed from the a half five percent guaranteed from the feds. So that that was the problem they feds. So that that was the problem they feds. So that that was the problem they had. Now there was no I mean again like had. Now there was no I mean again like had. Now there was no I mean again like what how risky were they? They were what how risky were they? They were what how risky were they? They were still governmentbacked. There was still governmentbacked. There was still governmentbacked. There was nothing wrong here like and basically nothing wrong here like and basically nothing wrong here like and basically that the the difference was they had that the the difference was they had that the the difference was they had some of these like what call AFS some of these like what call AFS some of these like what call AFS available for sale and some they were available for sale and some they were available for sale and some they were planning to hold to maturity. So if you planning to hold to maturity. So if you planning to hold to maturity. So if you you know you don't lose the money even you know you don't lose the money even you know you don't lose the money even if you have a low interest rate you know if you have a low interest rate you know if you have a low interest rate you know even though the value of the bond goes even though the value of the bond goes even though the value of the bond goes down you don't actually lose any money down you don't actually lose any money down you don't actually lose any money as long as you plan to hold it to as long as you plan to hold it to as long as you plan to hold it to maturity. The challenge is um you know maturity. The challenge is um you know maturity. The challenge is um you know they basically didn't what they decided they basically didn't what they decided they basically didn't what they decided to do was to just to crystallize that

to do was to just to crystallize that to do was to just to crystallize that loss and you know in order so they could loss and you know in order so they could loss and you know in order so they could free up capital and buy higher free up capital and buy higher free up capital and buy higher performing assets. That's fundamentally performing assets. That's fundamentally performing assets. That's fundamentally what I think they were trying to do. the what I think they were trying to do. the what I think they were trying to do. the the the problem became that um they did the the problem became that um they did the the problem became that um they did that the day after uh uh they they that the day after uh uh they they that the day after uh uh they they announced this the day well so what they announced this the day well so what they announced this the day well so what they did was they did that and then they said did was they did that and then they said did was they did that and then they said okay in order to make sure that we're okay in order to make sure that we're okay in order to make sure that we're we're already within the sort of like we're already within the sort of like we're already within the sort of like federal requirements for safety but in federal requirements for safety but in federal requirements for safety but in order to stay even more on this side of order to stay even more on this side of order to stay even more on this side of like of this we're going to raise $2.5 like of this we're going to raise $2.5 like of this we're going to raise $2.5 billion dollarsish of equity sale billion dollarsish of equity sale billion dollarsish of equity sale basically the the challenge was in part basically the the challenge was in part basically the the challenge was in part is that They announced this the day is that They announced this the day is that They announced this the day after Silvergate went under. So after Silvergate went under. So after Silvergate went under. So Silvergate was this crypto bank and then Silvergate was this crypto bank and then Silvergate was this crypto bank and then it's basically a PR disaster from their it's basically a PR disaster from their it's basically a PR disaster from their end. They basically decided to to put end. They basically decided to to put end. They basically decided to to put that out there that you know this was that out there that you know this was that out there that you know this was happening. They taken crystallized this happening. They taken crystallized this happening. They taken crystallized this loss and they were by the way they're loss and they were by the way they're loss and they were by the way they're raising two and a half billion dollars raising two and a half billion dollars raising two and a half billion dollars with the help of Goldman Sachs and like with the help of Goldman Sachs and like with the help of Goldman Sachs and like General Atlantic was putting 500 million General Atlantic was putting 500 million General Atlantic was putting 500 million in. The challenge was that well they in. The challenge was that well they in. The challenge was that well they came out the day after another bank came out the day after another bank came out the day after another bank failed with like hey um we ra we want to failed with like hey um we ra we want to failed with like hey um we ra we want to raise we need to like the impression was raise we need to like the impression was raise we need to like the impression was we need to raise $2.5 billion and we've we need to raise $2.5 billion and we've we need to raise $2.5 billion and we've only raised 500 million and so that's only raised 500 million and so that's only raised 500 million and so that's what sort of triggered people to stop what sort of triggered people to stop what sort of triggered people to stop being like hey what happened and then being like hey what happened and then being like hey what happened and then and I truly believe this I think sort of and I truly believe this I think sort of and I truly believe this I think sort of VCs calls this bank run is is my view so VCs calls this bank run is is my view so VCs calls this bank run is is my view so some high-profile VCs then started some high-profile VCs then started some high-profile VCs then started advising their portfolio companies that advising their portfolio companies that advising their portfolio companies that they should take their cash out now was

they should take their cash out now was they should take their cash out now was this this this I heard was Peter Teal. The first one I I heard was Peter Teal. The first one I I heard was Peter Teal. The first one I saw was the first one, but certainly saw was the first one, but certainly saw was the first one, but certainly other VCs too instead of what I think other VCs too instead of what I think other VCs too instead of what I think they should have done which is like you they should have done which is like you they should have done which is like you know basically get on a call and be like know basically get on a call and be like know basically get on a call and be like hey you know like let's not induce a hey you know like let's not induce a hey you know like let's not induce a bank run here. They basically induced a bank run here. They basically induced a bank run here. They basically induced a bank run telling everybody to yank their bank run telling everybody to yank their bank run telling everybody to yank their money out. And so when that started, you money out. And so when that started, you money out. And so when that started, you know, like what are you going to do? know, like what are you going to do? know, like what are you going to do? Like you fast like a flash crash of Like you fast like a flash crash of Like you fast like a flash crash of deposits and and really what would deposits and and really what would deposits and and really what would happen then is like the problem is now happen then is like the problem is now happen then is like the problem is now you in order to to fund all that stuff you in order to to fund all that stuff you in order to to fund all that stuff you have to start selling things that you have to start selling things that you have to start selling things that you weren't planning to sell you weren't planning to sell you weren't planning to sell because they don't they're not liquid, because they don't they're not liquid, because they don't they're not liquid, right? They have $200 billion of assets right? They have $200 billion of assets right? They have $200 billion of assets but only a small percentage of that as but only a small percentage of that as but only a small percentage of that as liquid at any time. That's what a run on liquid at any time. That's what a run on liquid at any time. That's what a run on the bank is is a bunch of people saying the bank is is a bunch of people saying the bank is is a bunch of people saying I need my money right away. I need a I need my money right away. I need a I need my money right away. I need a hundred billion of that. And it's like hundred billion of that. And it's like hundred billion of that. And it's like we don't have that in cash. Right. we don't have that in cash. Right. we don't have that in cash. Right. Exactly. And actually like even when Exactly. And actually like even when Exactly. And actually like even when they got shut down on Friday morning in they got shut down on Friday morning in they got shut down on Friday morning in a Pacific time, they had more than $50 a Pacific time, they had more than $50 a Pacific time, they had more than $50 billion in in in assets in excess of billion in in in assets in excess of billion in in in assets in excess of deposits. So this wasn't really deposits. So this wasn't really deposits. So this wasn't really something where you know like you know something where you know like you know something where you know like you know they did took this huge risks and then they did took this huge risks and then they did took this huge risks and then you know they just crashed and everyone you know they just crashed and everyone you know they just crashed and everyone ran really like you know I think if a ran really like you know I think if a ran really like you know I think if a small handful a dozen or half a dozen small handful a dozen or half a dozen small handful a dozen or half a dozen VCs had gotten together and been like VCs had gotten together and been like VCs had gotten together and been like okay let's show a united front in okay let's show a united front in okay let's show a united front in support of SVB I think SVB still would support of SVB I think SVB still would support of SVB I think SVB still would have been around.

have been around. have been around. Yeah. And so as of Friday, we were Yeah. And so as of Friday, we were Yeah. And so as of Friday, we were calculating, it's like, okay, FDSC calculating, it's like, okay, FDSC calculating, it's like, okay, FDSC insurance is $250,000. And when we do a insurance is $250,000. And when we do a insurance is $250,000. And when we do a capital call for our funds, because we capital call for our funds, because we capital call for our funds, because we invest in bootstrap SAS companies, we invest in bootstrap SAS companies, we invest in bootstrap SAS companies, we get literally millions of dollars into get literally millions of dollars into get literally millions of dollars into bank accounts. And so what do you you bank accounts. And so what do you you bank accounts. And so what do you you know, that's you know, uninsured by the know, that's you know, uninsured by the know, that's you know, uninsured by the by FDIC. And so we're strategizing like by FDIC. And so we're strategizing like by FDIC. And so we're strategizing like how does, you know, how does this play how does, you know, how does this play how does, you know, how does this play out? And then that essentially was out? And then that essentially was out? And then that essentially was assuaged yesterday afternoon when the assuaged yesterday afternoon when the assuaged yesterday afternoon when the Federal Reserve said Federal Reserve said Federal Reserve said we're going to cover it, right? That we're going to cover it, right? That we're going to cover it, right? That that they have a fund. They they said, that they have a fund. They they said, that they have a fund. They they said, but what they said is we're going to but what they said is we're going to but what they said is we're going to backs stop it. We we have this 25 backs stop it. We we have this 25 backs stop it. We we have this 25 billion already in this something fund. billion already in this something fund. billion already in this something fund. I forget what it's called and we don't I forget what it's called and we don't I forget what it's called and we don't we're going to backs stop it if needed, we're going to backs stop it if needed, we're going to backs stop it if needed, but we don't even expect to need to but we don't even expect to need to but we don't even expect to need to touch it. touch it. touch it. Yeah. Yeah. Yeah. Right. That's what they said Right. That's what they said Right. That's what they said fundamentally. Yeah. So there's no and fundamentally. Yeah. So there's no and fundamentally. Yeah. So there's no and this must be very clear like there's no this must be very clear like there's no this must be very clear like there's no taxpayer money going out here. You know, taxpayer money going out here. You know, taxpayer money going out here. You know, this is not this is not like the this is not this is not like the this is not this is not like the government handing cash to, you know, government handing cash to, you know, government handing cash to, you know, VCs who took a bunch of risk. This is VCs who took a bunch of risk. This is VCs who took a bunch of risk. This is just basically the federal basically just basically the federal basically just basically the federal basically guaranteeing the deposits, but the guaranteeing the deposits, but the guaranteeing the deposits, but the actual actual money like there was no actual actual money like there was no actual actual money like there was no there will be no money coming from there will be no money coming from there will be no money coming from taxpayers to any of the depositors. It's taxpayers to any of the depositors. It's taxpayers to any of the depositors. It's just it it they needed to do this and just it it they needed to do this and just it it they needed to do this and you can see it on the Monday morning you can see it on the Monday morning you can see it on the Monday morning like what happened with all the bank like what happened with all the bank like what happened with all the bank stock this morning. This is even after stock this morning. This is even after stock this morning. This is even after all these things were guaranteed.

all these things were guaranteed. all these things were guaranteed. Like there's a huge there would have Like there's a huge there would have Like there's a huge there would have been an enormous run on any bank that been an enormous run on any bank that been an enormous run on any bank that wasn't like the top four banks. We would wasn't like the top four banks. We would wasn't like the top four banks. We would have had like I talked to several people have had like I talked to several people have had like I talked to several people in real estate for example who basically in real estate for example who basically in real estate for example who basically saying like I got $100 million across saying like I got $100 million across saying like I got $100 million across eight regional banks. We have a plan eight regional banks. We have a plan eight regional banks. We have a plan Monday morning 8 am. We're going to wire Monday morning 8 am. We're going to wire Monday morning 8 am. We're going to wire everything to JP Morgan. And that would everything to JP Morgan. And that would everything to JP Morgan. And that would have happened across across the country have happened across across the country have happened across across the country for sure. for sure. for sure. It would have been catastrophic. It would have been catastrophic. It would have been catastrophic. Basically caused a bunch of run on Basically caused a bunch of run on Basically caused a bunch of run on additional banks because this is a additional banks because this is a additional banks because this is a contagion, right? Yeah. contagion, right? Yeah. contagion, right? Yeah. So that's the thing I wanted to say. I So that's the thing I wanted to say. I So that's the thing I wanted to say. I mean the the whole weekend I was like mean the the whole weekend I was like mean the the whole weekend I was like I'm hoping the Fed steps in because I'm hoping the Fed steps in because I'm hoping the Fed steps in because again this is not a bailout like 2008 again this is not a bailout like 2008 again this is not a bailout like 2008 2009 where banks themselves the 2009 where banks themselves the 2009 where banks themselves the shareholders of a bank the equity owners shareholders of a bank the equity owners shareholders of a bank the equity owners the you know everybody the CEOs and all the you know everybody the CEOs and all the you know everybody the CEOs and all that they the the bank was given money that they the the bank was given money that they the the bank was given money to stay solvent and to stay in business. to stay solvent and to stay in business. to stay solvent and to stay in business. It was a taxpayer handout. Now it turns It was a taxpayer handout. Now it turns It was a taxpayer handout. Now it turns out the US government actually made out the US government actually made out the US government actually made money on all that. Did you know that? money on all that. Did you know that? money on all that. Did you know that? Through the warrants and whatever else Through the warrants and whatever else Through the warrants and whatever else and the loans they got paid back. But and the loans they got paid back. But and the loans they got paid back. But that's aside, this is very different that's aside, this is very different that's aside, this is very different from this. Silicon Valley Bank is done. from this. Silicon Valley Bank is done. from this. Silicon Valley Bank is done. It went to zero. If you owned all the It went to zero. If you owned all the It went to zero. If you owned all the equity holders, like the shareholders in equity holders, like the shareholders in equity holders, like the shareholders in SVB, they get nothing. The thing that SVB, they get nothing. The thing that SVB, they get nothing. The thing that the Fed is stepping into do, and as you the Fed is stepping into do, and as you the Fed is stepping into do, and as you said, not taxpayer money, is to make said, not taxpayer money, is to make said, not taxpayer money, is to make startups. And these are like, look, startups. And these are like, look, startups. And these are like, look, people say, well, startups in Silicon people say, well, startups in Silicon people say, well, startups in Silicon Valley and this that, but like tiny seed Valley and this that, but like tiny seed Valley and this that, but like tiny seed startups, there's like we funded 105 startups, there's like we funded 105 startups, there's like we funded 105 companies and like three of them are in companies and like three of them are in companies and like three of them are in Silicon Valley. You know, these are like Silicon Valley. You know, these are like Silicon Valley. You know, these are like in the Midwest. These are all over the in the Midwest. These are all over the in the Midwest. These are all over the world and they're just small businesses world and they're just small businesses world and they're just small businesses that you that you that you obviously like some of the stuff come obviously like some of the stuff come obviously like some of the stuff come through that people are like why would through that people are like why would through that people are like why would you only super wealthy people stake more

you only super wealthy people stake more you only super wealthy people stake more than 250,000. I'm like yeah but okay so than 250,000. I'm like yeah but okay so than 250,000. I'm like yeah but okay so h how does this work? You know we have a h how does this work? You know we have a h how does this work? You know we have a 100 plus investors and we're going to 100 plus investors and we're going to 100 plus investors and we're going to invest in 30 40 companies. What are we invest in 30 40 companies. What are we invest in 30 40 companies. What are we supposed to do? Like you know put the supposed to do? Like you know put the supposed to do? Like you know put the money in 50 different bank accounts. Is money in 50 different bank accounts. Is money in 50 different bank accounts. Is that the prudent thing to do? I mean that the prudent thing to do? I mean that the prudent thing to do? I mean it's it's a you know it's a nightmare of it's it's a you know it's a nightmare of it's it's a you know it's a nightmare of of of accounting basically to do that. of of accounting basically to do that. of of accounting basically to do that. So, so we didn't. Um, so yeah, it's I I So, so we didn't. Um, so yeah, it's I I So, so we didn't. Um, so yeah, it's I I think people really misunderstand what's think people really misunderstand what's think people really misunderstand what's going on in terms of, you know, I was going on in terms of, you know, I was going on in terms of, you know, I was doing it. doing it. doing it. That's the thing. The $250,000 FDIC That's the thing. The $250,000 FDIC That's the thing. The $250,000 FDIC limit, uh, even for individuals, okay, limit, uh, even for individuals, okay, limit, uh, even for individuals, okay, maybe. But like when you run a business maybe. But like when you run a business maybe. But like when you run a business of any size, you have a cash back. I of any size, you have a cash back. I of any size, you have a cash back. I mean, you have 30 employees, 40 mean, you have 30 employees, 40 mean, you have 30 employees, 40 employees, like your payroll, that's employees, like your payroll, that's employees, like your payroll, that's like two months of pay, three months of like two months of pay, three months of like two months of pay, three months of payroll, whatever. It's just not that payroll, whatever. It's just not that payroll, whatever. It's just not that much. much. much. That's the problem is with businesses That's the problem is with businesses That's the problem is with businesses that this amount of, you know, that that this amount of, you know, that that this amount of, you know, that amount of insurance. amount of insurance. amount of insurance. Yeah. and the notion I mean so the Yeah. and the notion I mean so the Yeah. and the notion I mean so the fundamentally what's going to happen now fundamentally what's going to happen now fundamentally what's going to happen now and you're seeing that with Mercury and and you're seeing that with Mercury and and you're seeing that with Mercury and Brex and all this stuff is like Brex and all this stuff is like Brex and all this stuff is like basically that you'll have software basically that you'll have software basically that you'll have software layers on top that'll spread the risk layers on top that'll spread the risk layers on top that'll spread the risk across you know 30 banks at a time you across you know 30 banks at a time you across you know 30 banks at a time you know and that's that's one way to go know and that's that's one way to go know and that's that's one way to go there now here's my view of this if you there now here's my view of this if you there now here's my view of this if you do that then you get I don't know say5 do that then you get I don't know say5 do that then you get I don't know say5 million$10 million worth of FDIC million$10 million worth of FDIC million$10 million worth of FDIC insurance I don't see why that's like insurance I don't see why that's like insurance I don't see why that's like you know as somebody who decides to you know as somebody who decides to you know as somebody who decides to stick money in the bank what moral stick money in the bank what moral stick money in the bank what moral hazard did I you know decide to did I hazard did I you know decide to did I hazard did I you know decide to did I take by taking cash and putting in a take by taking cash and putting in a take by taking cash and putting in a bank account. I don't think you really bank account. I don't think you really bank account. I don't think you really understand you want a system where like understand you want a system where like understand you want a system where like basically the US all of US industry basically the US all of US industry basically the US all of US industry thinks that you know there's no single thinks that you know there's no single thinks that you know there's no single bank that can take more than 250,000.

bank that can take more than 250,000. bank that can take more than 250,000. That's a nightmare scenario for all of That's a nightmare scenario for all of That's a nightmare scenario for all of the US industry industrial base. It's the US industry industrial base. It's the US industry industrial base. It's just not tenable as a as an approach. just not tenable as a as an approach. just not tenable as a as an approach. Um, and you basically I think if if if Um, and you basically I think if if if Um, and you basically I think if if if that had if it hadn't been rescued, I that had if it hadn't been rescued, I that had if it hadn't been rescued, I think pretty much all banks other than think pretty much all banks other than think pretty much all banks other than like the top four most likely would have like the top four most likely would have like the top four most likely would have gone out of business. So now you'll have gone out of business. So now you'll have gone out of business. So now you'll have four banks that are way too big to fail. four banks that are way too big to fail. four banks that are way too big to fail. You can never let them fail, You can never let them fail, You can never let them fail, which arguably maybe you should have which arguably maybe you should have which arguably maybe you should have done during in 2008, but now they're done during in 2008, but now they're done during in 2008, but now they're they're so big because nobody else is they're so big because nobody else is they're so big because nobody else is going to trust like putting money in a going to trust like putting money in a going to trust like putting money in a local regional bank. Like why would you? local regional bank. Like why would you? local regional bank. Like why would you? It doesn't make any sense to do so It doesn't make any sense to do so It doesn't make any sense to do so because that money could be gone. because that money could be gone. because that money could be gone. The risk. Yeah. And also I mean there's The risk. Yeah. And also I mean there's The risk. Yeah. And also I mean there's a huge um risk to he I think you had a huge um risk to he I think you had a huge um risk to he I think you had said boy we might be hitting a like a said boy we might be hitting a like a said boy we might be hitting a like a startup uh winter where just the market startup uh winter where just the market startup uh winter where just the market the bottom drops out no one's spending the bottom drops out no one's spending the bottom drops out no one's spending money to buy companies. No one's money to buy companies. No one's money to buy companies. No one's spending investing money like if this spending investing money like if this spending investing money like if this hadn't been you know backs stopped hadn't been you know backs stopped hadn't been you know backs stopped yesterday. So yesterday. So yesterday. So we have tons of questions coming in. I we have tons of questions coming in. I we have tons of questions coming in. I want to get to those. Hopefully that's want to get to those. Hopefully that's want to get to those. Hopefully that's been a good overview for folks.

been a good overview for folks. been a good overview for folks. obviously feeling very much relieved obviously feeling very much relieved obviously feeling very much relieved today and I believe um we're supposed to today and I believe um we're supposed to today and I believe um we're supposed to receive funds today, right? It should receive funds today, right? It should receive funds today, right? It should already be in our account in terms of already be in our account in terms of already be in our account in terms of well yeah what happened apparently so so well yeah what happened apparently so so well yeah what happened apparently so so so famously the Silicon Valley bank web so famously the Silicon Valley bank web so famously the Silicon Valley bank web interface has always been atrocious. interface has always been atrocious. interface has always been atrocious. Um so so yeah so I'm not surprised but Um so so yeah so I'm not surprised but Um so so yeah so I'm not surprised but what we hearing is that basically all what we hearing is that basically all what we hearing is that basically all the funds are available as normal. the funds are available as normal. the funds are available as normal. You're just encouraged to as soon as you You're just encouraged to as soon as you You're just encouraged to as soon as you can move those money into a different can move those money into a different can move those money into a different bank account. A lot of people are strugg bank account. A lot of people are strugg bank account. A lot of people are strugg are like scrambling to to get set up are like scrambling to to get set up are like scrambling to to get set up with a different bank account basically with a different bank account basically with a different bank account basically so they can move it out somewhere else. so they can move it out somewhere else. so they can move it out somewhere else. So that's what's going on pretty much So that's what's going on pretty much So that's what's going on pretty much across the across across the across across the across they've been unable to log in thus far they've been unable to log in thus far they've been unable to log in thus far because their servers are down but it is because their servers are down but it is because their servers are down but it is what it is. So, first question. Martin what it is. So, first question. Martin what it is. So, first question. Martin uh in the tiny seat slack asks, "I'd uh in the tiny seat slack asks, "I'd uh in the tiny seat slack asks, "I'd love to get your thoughts on this tweet love to get your thoughts on this tweet love to get your thoughts on this tweet from modest proposal one on Twitter." from modest proposal one on Twitter." from modest proposal one on Twitter." And this is a tweet. The piece I haven't And this is a tweet. The piece I haven't And this is a tweet. The piece I haven't read yet, but I'm very interested in is read yet, but I'm very interested in is read yet, but I'm very interested in is how does the tech e ecosystem change how does the tech e ecosystem change how does the tech e ecosystem change over time without SVB? The cost and ease over time without SVB? The cost and ease over time without SVB? The cost and ease of doing business has uh has to be going of doing business has uh has to be going of doing business has uh has to be going up meaningfully. Everything from up meaningfully. Everything from up meaningfully. Everything from fundraising to lines of credit. I don't fundraising to lines of credit. I don't fundraising to lines of credit. I don't think the ramifications of this are very think the ramifications of this are very think the ramifications of this are very well understood. I have my own thoughts, well understood. I have my own thoughts, well understood. I have my own thoughts, but what what are your thoughts? Yeah, I but what what are your thoughts? Yeah, I but what what are your thoughts? Yeah, I agree 100% with that. I think like agree 100% with that. I think like agree 100% with that. I think like basically Silicon Valley Bank was, you basically Silicon Valley Bank was, you basically Silicon Valley Bank was, you know, pretty much the only one of the know, pretty much the only one of the know, pretty much the only one of the only banking like true banks that like only banking like true banks that like only banking like true banks that like would do things like provide venture would do things like provide venture would do things like provide venture debt and and lines of credit to debt and and lines of credit to debt and and lines of credit to startups. And I think people are I I startups. And I think people are I I startups. And I think people are I I think the most likely outcome of this is

think the most likely outcome of this is think the most likely outcome of this is that and like obviously we all know that that and like obviously we all know that that and like obviously we all know that like with the war in Ukraine and like with the war in Ukraine and like with the war in Ukraine and whatnot, the fundraising environment has whatnot, the fundraising environment has whatnot, the fundraising environment has gotten significantly harder, gotten significantly harder, gotten significantly harder, you know, in 2022 and going into 23 and you know, in 2022 and going into 23 and you know, in 2022 and going into 23 and I think a lot of the time like startups I think a lot of the time like startups I think a lot of the time like startups that were reasonably well capitalized, that were reasonably well capitalized, that were reasonably well capitalized, they were planning and but maybe will they were planning and but maybe will they were planning and but maybe will struggle to raise in this environment struggle to raise in this environment struggle to raise in this environment were planning to to rely on venture debt were planning to to rely on venture debt were planning to to rely on venture debt and like debt options. And I think and like debt options. And I think and like debt options. And I think that's become that's become that's become significantly harder slashimpossible significantly harder slashimpossible significantly harder slashimpossible pretty much overnight over the weekend. pretty much overnight over the weekend. pretty much overnight over the weekend. And so I think what's most likely to And so I think what's most likely to And so I think what's most likely to happen is that you know I I think a lot happen is that you know I I think a lot happen is that you know I I think a lot of people were predicting like a because of people were predicting like a because of people were predicting like a because people had raised so much money and all people had raised so much money and all people had raised so much money and all this stuff like there's going to be like this stuff like there's going to be like this stuff like there's going to be like a slowmoving car crash with f with a slowmoving car crash with f with a slowmoving car crash with f with startups going under. I think if startups going under. I think if startups going under. I think if anything this will this will accelerate anything this will this will accelerate anything this will this will accelerate that because the the people who can't that because the the people who can't that because the the people who can't raise who plan had to raise but were raise who plan had to raise but were raise who plan had to raise but were planning on relying on venture debt are planning on relying on venture debt are planning on relying on venture debt are now going to struggle to find those now going to struggle to find those now going to struggle to find those things. So I think it'll it'll things. So I think it'll it'll things. So I think it'll it'll accelerate you know death in the more accelerate you know death in the more accelerate you know death in the more traditional venture environment. I think traditional venture environment. I think traditional venture environment. I think I think that's probably true. Um and I think that's probably true. Um and I think that's probably true. Um and also I think in general like you know I also I think in general like you know I also I think in general like you know I think this will significantly impact the think this will significantly impact the think this will significantly impact the appetite for people to invest money and appetite for people to invest money and appetite for people to invest money and lend money. So I think like things will lend money. So I think like things will lend money. So I think like things will slow down and freeze and I think that's slow down and freeze and I think that's slow down and freeze and I think that's you know does some of the same stuff you know does some of the same stuff you know does some of the same stuff that the Fed is doing with the that the Fed is doing with the that the Fed is doing with the increasing the the the rate. So, I increasing the the the rate. So, I increasing the the the rate. So, I wouldn't be surprised if there's going wouldn't be surprised if there's going wouldn't be surprised if there's going to be another meeting in next week about to be another meeting in next week about to be another meeting in next week about the Fed raise and everyone's saying, is the Fed raise and everyone's saying, is the Fed raise and everyone's saying, is it going to be 25 basis points or 50? I

it going to be 25 basis points or 50? I it going to be 25 basis points or 50? I wouldn't be surprised if it's nothing wouldn't be surprised if it's nothing wouldn't be surprised if it's nothing now because of because of this now because of because of this now because of because of this because of the fear the fear around it. because of the fear the fear around it. because of the fear the fear around it. Yeah, I think that's I think you're Yeah, I think that's I think you're Yeah, I think that's I think you're right. I think startups that rely on right. I think startups that rely on right. I think startups that rely on funding and especially funding and especially funding and especially venture debt are going to see it because venture debt are going to see it because venture debt are going to see it because SVB was a huge provider of of venture SVB was a huge provider of of venture SVB was a huge provider of of venture debt. We don't have time to really debt. We don't have time to really debt. We don't have time to really define what that is, but just assume define what that is, but just assume define what that is, but just assume it's it's a loans plus they get an it's it's a loans plus they get an it's it's a loans plus they get an option to buy some part or company option to buy some part or company option to buy some part or company called warrants. called warrants. called warrants. They also had Yeah. They also had a They also had Yeah. They also had a They also had Yeah. They also had a pretty significant portfolio of startup pretty significant portfolio of startup pretty significant portfolio of startup shares. Yeah. And so I think because of shares. Yeah. And so I think because of shares. Yeah. And so I think because of these warrants and and things like that these warrants and and things like that these warrants and and things like that that they had and those are assets now that they had and those are assets now that they had and those are assets now to to creditors and I think you know to to creditors and I think you know to to creditors and I think you know it'll put downward pressure on secondary it'll put downward pressure on secondary it'll put downward pressure on secondary prices for some of these you know prices for some of these you know prices for some of these you know privately listed companies if they're privately listed companies if they're privately listed companies if they're required to be sold. The other required to be sold. The other required to be sold. The other interesting thing is I have several interesting thing is I have several interesting thing is I have several friends who were unable to get a friends who were unable to get a friends who were unable to get a mortgage because they are a startup mortgage because they are a startup mortgage because they are a startup founder and you start a company and even founder and you start a company and even founder and you start a company and even if you've raised money and you know you if you've raised money and you know you if you've raised money and you know you have tons of money in the bank and have tons of money in the bank and have tons of money in the bank and you're taking you know a salary you go you're taking you know a salary you go you're taking you know a salary you go to a standard bank and they don't to a standard bank and they don't to a standard bank and they don't understand it. Same thing being a understand it. Same thing being a understand it. Same thing being a venture capitalist venture capitalist venture capitalist which you know it sounds like a first which you know it sounds like a first which you know it sounds like a first world problem but it's like no I can't world problem but it's like no I can't world problem but it's like no I can't get money to buy a house. No one will get money to buy a house. No one will get money to buy a house. No one will lend me money. SVB understood that. You lend me money. SVB understood that. You lend me money. SVB understood that. You know they would ask about your fund and know they would ask about your fund and know they would ask about your fund and this and that. So that's that's going to this and that. So that's that's going to this and that. So that's that's going to be maybe a not as broad of of an issue, be maybe a not as broad of of an issue, be maybe a not as broad of of an issue, but certainly an impact. Our next but certainly an impact. Our next but certainly an impact. Our next question is from Dave in Microsoft question is from Dave in Microsoft question is from Dave in Microsoft Connect, and he asks, "I just raised a Connect, and he asks, "I just raised a Connect, and he asks, "I just raised a friends and family seed round and friends and family seed round and friends and family seed round and and yeah, deposited it into SVB last and yeah, deposited it into SVB last and yeah, deposited it into SVB last week. It is over what timing? Sorry,

week. It is over what timing? Sorry, week. It is over what timing? Sorry, Dave." And it's over the $250,000 FDIC Dave." And it's over the $250,000 FDIC Dave." And it's over the $250,000 FDIC limit. It was definitely a stressful limit. It was definitely a stressful limit. It was definitely a stressful weekend. So it's like it's it's stuff weekend. So it's like it's it's stuff weekend. So it's like it's it's stuff like this like friends and this is not a like this like friends and this is not a like this like friends and this is not a bunch of billionaires. It's like his bunch of billionaires. It's like his bunch of billionaires. It's like his friends and family giving him money to friends and family giving him money to friends and family giving him money to grow a startup to create jobs you know grow a startup to create jobs you know grow a startup to create jobs you know and and he could have lost a chunk of and and he could have lost a chunk of and and he could have lost a chunk of money. His question is the startup world money. His question is the startup world money. His question is the startup world understands the contagion and payroll understands the contagion and payroll understands the contagion and payroll issues that would have ensued if the issues that would have ensued if the issues that would have ensued if the government didn't backs stop uninsured government didn't backs stop uninsured government didn't backs stop uninsured deposits. However, public perception deposits. However, public perception deposits. However, public perception which you can already see on Twitter is which you can already see on Twitter is which you can already see on Twitter is that this is just another bailout for that this is just another bailout for that this is just another bailout for wealthy people. How do you parse this wealthy people. How do you parse this wealthy people. How do you parse this out and what are your thoughts? I guess out and what are your thoughts? I guess out and what are your thoughts? I guess we kind of already already answered this we kind of already already answered this we kind of already already answered this a bit. Do you have any any additional a bit. Do you have any any additional a bit. Do you have any any additional thoughts on this? thoughts on this? thoughts on this? I mean I think I think this is sort of I mean I think I think this is sort of I mean I think I think this is sort of the fallout to a degree from the change the fallout to a degree from the change the fallout to a degree from the change in sentiment about tech. So I I think in sentiment about tech. So I I think in sentiment about tech. So I I think broadly some of the main press pieces broadly some of the main press pieces broadly some of the main press pieces has turned pretty hostile to tech since has turned pretty hostile to tech since has turned pretty hostile to tech since about you know 2012 2014. It feels like, about you know 2012 2014. It feels like, about you know 2012 2014. It feels like, you know, the usual it feels like a you know, the usual it feels like a you know, the usual it feels like a missed opportunity from tech. Although missed opportunity from tech. Although missed opportunity from tech. Although we saw, you know, with with the herd we saw, you know, with with the herd we saw, you know, with with the herd mentality this this week that um I don't mentality this this week that um I don't mentality this this week that um I don't know how much of a community there know how much of a community there know how much of a community there really is, but fundamentally I think really is, but fundamentally I think really is, but fundamentally I think this is the backlash of some pretty this is the backlash of some pretty this is the backlash of some pretty highprofile VCs being class A highprofile VCs being class A highprofile VCs being class A and sort of like, you know, the joke is and sort of like, you know, the joke is and sort of like, you know, the joke is like, you know, there's no there's no um like, you know, there's no there's no um like, you know, there's no there's no um atheists on a foxhole and no atheists on a foxhole and no atheists on a foxhole and no libertarians during a bank run. Like I libertarians during a bank run. Like I libertarians during a bank run. Like I think some of that is playing out.

think some of that is playing out. think some of that is playing out. There's been a lot of like huffing and There's been a lot of like huffing and There's been a lot of like huffing and puffing from pretty big VCs who puffing from pretty big VCs who puffing from pretty big VCs who have like skewed people's perception of have like skewed people's perception of have like skewed people's perception of of what what this means in the economy. of what what this means in the economy. of what what this means in the economy. And so I think there's a lot of sort of And so I think there's a lot of sort of And so I think there's a lot of sort of Scott and freed as it were when it comes Scott and freed as it were when it comes Scott and freed as it were when it comes to seeing it's like let's go and get to seeing it's like let's go and get to seeing it's like let's go and get those But fundamentally here's those But fundamentally here's those But fundamentally here's the thing like those glass eye the thing like those glass eye the thing like those glass eye they're fine right do you think they they're fine right do you think they they're fine right do you think they have cash stuck in SVB? No. Most of the have cash stuck in SVB? No. Most of the have cash stuck in SVB? No. Most of the time it's they're invested all over. You time it's they're invested all over. You time it's they're invested all over. You know it's it's really the smaller know it's it's really the smaller know it's it's really the smaller players that are that are getting hurt players that are that are getting hurt players that are that are getting hurt for this. Um, so, so yeah, I think for this. Um, so, so yeah, I think for this. Um, so, so yeah, I think that's part of the reflection. Like part that's part of the reflection. Like part that's part of the reflection. Like part of the reflection is like tech has just of the reflection is like tech has just of the reflection is like tech has just been starting to be portrayed as this been starting to be portrayed as this been starting to be portrayed as this boogeyman and that's sort of playing out boogeyman and that's sort of playing out boogeyman and that's sort of playing out in people's perceptions of what happened in people's perceptions of what happened in people's perceptions of what happened for sure. for sure. for sure. Yeah. And it's interesting that tech is Yeah. And it's interesting that tech is Yeah. And it's interesting that tech is it's like Facebook and Google and Uber, it's like Facebook and Google and Uber, it's like Facebook and Google and Uber, they they're not I mean if they're they they're not I mean if they're they they're not I mean if they're banking at SVB at all, they're not under banking at SVB at all, they're not under banking at SVB at all, they're not under any danger of this. They have money all any danger of this. They have money all any danger of this. They have money all over the place, right? It it really is over the place, right? It it really is over the place, right? It it really is the smaller players, the tiny seed the smaller players, the tiny seed the smaller players, the tiny seed companies, the micro comp companies, the companies, the micro comp companies, the companies, the micro comp companies, the 40, 50, 60 person startups. I mean, we 40, 50, 60 person startups. I mean, we 40, 50, 60 person startups. I mean, we know that like the vast majority of jobs know that like the vast majority of jobs know that like the vast majority of jobs in the US specifically are created by in the US specifically are created by in the US specifically are created by companies under 50 employees, you know, companies under 50 employees, you know, companies under 50 employees, you know, and that that's what a lot of these and that that's what a lot of these and that that's what a lot of these funds uh you know were that's where a funds uh you know were that's where a funds uh you know were that's where a lot of these funds were from.

lot of these funds were from. lot of these funds were from. Next question. Yeah. So Kevin in Next question. Yeah. So Kevin in Next question. Yeah. So Kevin in Microsoft connect asks, "What can Microsoft connect asks, "What can Microsoft connect asks, "What can startups do to reduce potential startups do to reduce potential startups do to reduce potential fragility fragility fragility uh in light of SBB?" So as we move uh in light of SBB?" So as we move uh in light of SBB?" So as we move forward, what are some steps that we can forward, what are some steps that we can forward, what are some steps that we can be thinking about? So be thinking about? So be thinking about? So yeah, I mean I think so here's my thing. yeah, I mean I think so here's my thing. yeah, I mean I think so here's my thing. I suspect that we'll get to a point I suspect that we'll get to a point I suspect that we'll get to a point where like the FDIC insurance will be where like the FDIC insurance will be where like the FDIC insurance will be would be higher, which I think makes would be higher, which I think makes would be higher, which I think makes sense because it's like what's what's sense because it's like what's what's sense because it's like what's what's the value of not doing that? And you can the value of not doing that? And you can the value of not doing that? And you can say well then the government is backing say well then the government is backing say well then the government is backing the they take all the risk and stuff. the they take all the risk and stuff. the they take all the risk and stuff. you know, there are already regulations you know, there are already regulations you know, there are already regulations in place around what the level of risk in place around what the level of risk in place around what the level of risk you you have to take, you're allowed to you you have to take, you're allowed to you you have to take, you're allowed to take with the money. And so, okay, if take with the money. And so, okay, if take with the money. And so, okay, if you increase the limit now, now the you increase the limit now, now the you increase the limit now, now the banks need to put more money into the banks need to put more money into the banks need to put more money into the FDIC fund to backs stop more money. But FDIC fund to backs stop more money. But FDIC fund to backs stop more money. But I think that'll come in the I think that'll come in the I think that'll come in the intermediate, you'll definitely see intermediate, you'll definitely see intermediate, you'll definitely see things like, you know, like we're we're things like, you know, like we're we're things like, you know, like we're we're moving to Mercury, the the startup bank, moving to Mercury, the the startup bank, moving to Mercury, the the startup bank, and and you know, full disclosure, the and and you know, full disclosure, the and and you know, full disclosure, the founder is a friend of mine. Um, but founder is a friend of mine. Um, but founder is a friend of mine. Um, but they just today announced they have like they just today announced they have like they just today announced they have like a three million FDIC limit because what a three million FDIC limit because what a three million FDIC limit because what they're doing is behind the scenes is they're doing is behind the scenes is they're doing is behind the scenes is they take the money and then they spread they take the money and then they spread they take the money and then they spread it across multiple banks for everybody.

it across multiple banks for everybody. it across multiple banks for everybody. And they also like are offering like And they also like are offering like And they also like are offering like insured um, you know, basically treasury insured um, you know, basically treasury insured um, you know, basically treasury management products. So this would be management products. So this would be management products. So this would be things that like sweeps into government things that like sweeps into government things that like sweeps into government guaranteed bonds, that sort of thing. guaranteed bonds, that sort of thing. guaranteed bonds, that sort of thing. So, I I sort of hope that the FDIC limit So, I I sort of hope that the FDIC limit So, I I sort of hope that the FDIC limit will be raised because it's it's really will be raised because it's it's really will be raised because it's it's really it doesn't add any business value to it doesn't add any business value to it doesn't add any business value to spend like a lot of time and effort to spend like a lot of time and effort to spend like a lot of time and effort to just move money around like between just move money around like between just move money around like between different institutions and in and out of different institutions and in and out of different institutions and in and out of overnight funds and all this crap. Like overnight funds and all this crap. Like overnight funds and all this crap. Like that's not actually valuable stuff. that's not actually valuable stuff. that's not actually valuable stuff. No, it's No, it's No, it's it's just something that you sort of it's just something that you sort of it's just something that you sort of have to do now. And like I think I think have to do now. And like I think I think have to do now. And like I think I think that's sort of for startups that's what that's sort of for startups that's what that's sort of for startups that's what I would do if you have significant cash. I would do if you have significant cash. I would do if you have significant cash. I mean we did this too with Tiny. we I mean we did this too with Tiny. we I mean we did this too with Tiny. we would overnight they would be swept into would overnight they would be swept into would overnight they would be swept into you know government funds and and and you know government funds and and and you know government funds and and and government insured you know you know uh government insured you know you know uh government insured you know you know uh funds the the challenge was the bank got funds the the challenge was the bank got funds the the challenge was the bank got shut down on Friday during the business shut down on Friday during the business shut down on Friday during the business day so I was joking on Friday I was like day so I was joking on Friday I was like day so I was joking on Friday I was like it'd be better if you'd shut it down it'd be better if you'd shut it down it'd be better if you'd shut it down like a couple hours before because then like a couple hours before because then like a couple hours before because then our funds would have been with the feds our funds would have been with the feds our funds would have been with the feds right right right so so I think that's what'll happen so so I think that's what'll happen so so I think that's what'll happen people will start switching to banks and people will start switching to banks and people will start switching to banks and banks will start offering products that banks will start offering products that banks will start offering products that share the risk across so you're share the risk across so you're share the risk across so you're effectively no matter what happens with effectively no matter what happens with effectively no matter what happens with the FDIC limit you're getting a higher the FDIC limit you're getting a higher the FDIC limit you're getting a higher FDIC limit uh for your funds FDIC limit uh for your funds FDIC limit uh for your funds Right. Yeah. I I like the idea, you Right. Yeah. I I like the idea, you Right. Yeah. I I like the idea, you know, with my per our personal funds.

know, with my per our personal funds. know, with my per our personal funds. I've always had multiple banks, even if I've always had multiple banks, even if I've always had multiple banks, even if one of them is like a brokerage or one of them is like a brokerage or one of them is like a brokerage or retirement thing, they have, you know, retirement thing, they have, you know, retirement thing, they have, you know, an ATM and you can move money in and an ATM and you can move money in and an ATM and you can move money in and out. So, I've always had that ability. out. So, I've always had that ability. out. So, I've always had that ability. I've never done that with any business I've never done that with any business I've never done that with any business I've started. I just never thought it I've started. I just never thought it I've started. I just never thought it was necessary. So these days, I would was necessary. So these days, I would was necessary. So these days, I would have a spare bank account and even if have a spare bank account and even if have a spare bank account and even if you only have one month of payroll, you you only have one month of payroll, you you only have one month of payroll, you know, or two weeks of or just some know, or two weeks of or just some know, or two weeks of or just some amount of money that you can stash away amount of money that you can stash away amount of money that you can stash away that that that because the odds of of it all going away because the odds of of it all going away because the odds of of it all going away are relatively low. It can happen, but are relatively low. It can happen, but are relatively low. It can happen, but they're relatively low. But the odds of they're relatively low. But the odds of they're relatively low. But the odds of you not having any cash for a week, it you not having any cash for a week, it you not having any cash for a week, it is totally possible, right, of is totally possible, right, of is totally possible, right, of everything being locked up for a number everything being locked up for a number everything being locked up for a number of reasons. We're going to take more of reasons. We're going to take more of reasons. We're going to take more questions, but as a reminder, if you questions, but as a reminder, if you questions, but as a reminder, if you like these types of reactions to current like these types of reactions to current like these types of reactions to current events and more videos about growing events and more videos about growing events and more videos about growing your startup, make sure to like this your startup, make sure to like this your startup, make sure to like this video and subscribe to the channel. Next video and subscribe to the channel. Next video and subscribe to the channel. Next question is from Trevor and Microcom question is from Trevor and Microcom question is from Trevor and Microcom Connect. I'm curious why VCs did not Connect. I'm curious why VCs did not Connect. I'm curious why VCs did not encourage their companies to take out encourage their companies to take out encourage their companies to take out private deposit insurance for amounts private deposit insurance for amounts private deposit insurance for amounts over $250,000 or as we just said to over $250,000 or as we just said to over $250,000 or as we just said to diversify their holdings across several diversify their holdings across several diversify their holdings across several banks since this was a known risk banks since this was a known risk banks since this was a known risk factor. Was SVB just part of the good factor. Was SVB just part of the good factor. Was SVB just part of the good old boys network so VCs quietly ignored old boys network so VCs quietly ignored old boys network so VCs quietly ignored the risk or was there another reason? I the risk or was there another reason? I the risk or was there another reason? I will say I'll just address them moving will say I'll just address them moving will say I'll just address them moving it around to other banks because it's a it around to other banks because it's a it around to other banks because it's a huge pain in the ass and it's a bunch of huge pain in the ass and it's a bunch of huge pain in the ass and it's a bunch of wasted labor. It's not this does not wasted labor. It's not this does not wasted labor. It's not this does not grow our economy for me to have my ops grow our economy for me to have my ops grow our economy for me to have my ops person spending hours a month moving person spending hours a month moving person spending hours a month moving crap around. And uh you know to be crap around. And uh you know to be crap around. And uh you know to be honest there honest there honest there on the insurance side too there's no on the insurance side too there's no on the insurance side too there's no panacea there because then it's like all panacea there because then it's like all panacea there because then it's like all right now I have to pay for this to

right now I have to pay for this to right now I have to pay for this to store money in there for presumably a store money in there for presumably a store money in there for presumably a short amount of time and most of the short amount of time and most of the short amount of time and most of the time we have you know we have less we time we have you know we have less we time we have you know we have less we don't have a ton of money in tiny seed don't have a ton of money in tiny seed don't have a ton of money in tiny seed because we call the money in and then it because we call the money in and then it because we call the money in and then it gets spread out again once it's deployed gets spread out again once it's deployed gets spread out again once it's deployed and so now if FDIC insurance on top of and so now if FDIC insurance on top of and so now if FDIC insurance on top of that hey I got to pay for it okay but that hey I got to pay for it okay but that hey I got to pay for it okay but now are you you know moral hazard are now are you you know moral hazard are now are you you know moral hazard are you going to do your due diligence on you going to do your due diligence on you going to do your due diligence on the insurance company? How do you know the insurance company? How do you know the insurance company? How do you know the insurance company? How do you know the insurance company? How do you know the insurance company? How do you know if they don't go under? Where do they if they don't go under? Where do they if they don't go under? Where do they bestow their bank? Like, it's a it's a bestow their bank? Like, it's a it's a bestow their bank? Like, it's a it's a it's a like a it's a like a it's a like a sort of a rabbit hole of just one thing sort of a rabbit hole of just one thing sort of a rabbit hole of just one thing after another if you if you can't trust after another if you if you can't trust after another if you if you can't trust the system. If you need to make every the system. If you need to make every the system. If you need to make every piece of the financial system in the US, piece of the financial system in the US, piece of the financial system in the US, like all the inherent trust that exists like all the inherent trust that exists like all the inherent trust that exists there, if you need to make that explicit there, if you need to make that explicit there, if you need to make that explicit and charge for it, you're going to add a and charge for it, you're going to add a and charge for it, you're going to add a significant friction to the economic significant friction to the economic significant friction to the economic growth in the United States. So, I don't growth in the United States. So, I don't growth in the United States. So, I don't know that you want to do that. Like, it know that you want to do that. Like, it know that you want to do that. Like, it wasn't like a good old boy network. It wasn't like a good old boy network. It wasn't like a good old boy network. It was just look at any business with more was just look at any business with more was just look at any business with more than four employees. They will have been than four employees. They will have been than four employees. They will have been in this situation in the last 12 months in this situation in the last 12 months in this situation in the last 12 months where they had more than $250,000 in in where they had more than $250,000 in in where they had more than $250,000 in in a single bank account. They just had to a single bank account. They just had to a single bank account. They just had to like it's almost impossible not to do like it's almost impossible not to do like it's almost impossible not to do it.

it. it. Yeah. And it's do we want startups Yeah. And it's do we want startups Yeah. And it's do we want startups spending their time and money building a spending their time and money building a spending their time and money building a better product, finding more customers better product, finding more customers better product, finding more customers than hiring, creating new jobs and than hiring, creating new jobs and than hiring, creating new jobs and hiring people, or do I want them hiring people, or do I want them hiring people, or do I want them spending time screwing around with their spending time screwing around with their spending time screwing around with their bank account? Like the the red tape is bank account? Like the the red tape is bank account? Like the the red tape is it's just not not what we want to be it's just not not what we want to be it's just not not what we want to be doing. doing. doing. Kent on YouTube asks, "Do you think this Kent on YouTube asks, "Do you think this Kent on YouTube asks, "Do you think this will affect seed funding as much as it will affect seed funding as much as it will affect seed funding as much as it will mature mature fundraising cycles?" will mature mature fundraising cycles?" will mature mature fundraising cycles?" [Applause] [Applause] [Applause] You know, I think so because I think You know, I think so because I think You know, I think so because I think what's happening is what's happening is what's happening is the challenge is like a lot of VCs, they the challenge is like a lot of VCs, they the challenge is like a lot of VCs, they have some folks now that maybe they have some folks now that maybe they have some folks now that maybe they thought, okay, we know they can't raise, thought, okay, we know they can't raise, thought, okay, we know they can't raise, but now they like also can't tap debt but now they like also can't tap debt but now they like also can't tap debt markets. I think a lot of funds will now markets. I think a lot of funds will now markets. I think a lot of funds will now be earmarked at least towards propping be earmarked at least towards propping be earmarked at least towards propping up existing bets. So yeah, I think it'll up existing bets. So yeah, I think it'll up existing bets. So yeah, I think it'll have an impact on on how much money have an impact on on how much money have an impact on on how much money flows into precedency. flows into precedency. flows into precedency. I think in general it has a chilling I think in general it has a chilling I think in general it has a chilling effect on on the things. I think a lot effect on on the things. I think a lot effect on on the things. I think a lot of people will now be spending their of people will now be spending their of people will now be spending their time like LPs, investors, angels will time like LPs, investors, angels will time like LPs, investors, angels will now spend a lot of their time and effort now spend a lot of their time and effort now spend a lot of their time and effort moving money around and putting it in moving money around and putting it in moving money around and putting it in different places and you know worrying different places and you know worrying different places and you know worrying about Is this bank going to blow about Is this bank going to blow about Is this bank going to blow up? Is this thing going to go away up? Is this thing going to go away up? Is this thing going to go away instead of investing? I think that's instead of investing? I think that's instead of investing? I think that's true and I and I think I think it'll true and I and I think I think it'll true and I and I think I think it'll definitely impact seed investing and definitely impact seed investing and definitely impact seed investing and preed investing.

preed investing. preed investing. The next we only have two questions left The next we only have two questions left The next we only have two questions left and Chasey basically asked, "Do you and Chasey basically asked, "Do you and Chasey basically asked, "Do you think this affects fundraising for think this affects fundraising for think this affects fundraising for startups or does everything reset to startups or does everything reset to startups or does everything reset to where it was two weeks ago?" No, it where it was two weeks ago?" No, it where it was two weeks ago?" No, it sounds like you feel sounds like you feel sounds like you feel it was already bad two weeks ago. It's it was already bad two weeks ago. It's it was already bad two weeks ago. It's even worse today. even worse today. even worse today. I think so. And I wonder how long I think so. And I wonder how long I think so. And I wonder how long that'll last. That's the thing. You just that'll last. That's the thing. You just that'll last. That's the thing. You just don't know, right? there's an don't know, right? there's an don't know, right? there's an institutional memory or a cultural institutional memory or a cultural institutional memory or a cultural memory of this and will it take you know memory of this and will it take you know memory of this and will it take you know two months will it take six months does two months will it take six months does two months will it take six months does it take a year you know what happens it take a year you know what happens it take a year you know what happens and and the other interesting thing is and and the other interesting thing is and and the other interesting thing is if there is another regional bank if there is another regional bank if there is another regional bank failure god forbid you know it's that failure god forbid you know it's that failure god forbid you know it's that regional banks do fail over the years regional banks do fail over the years regional banks do fail over the years they just fail they just fail they just fail yeah now all of them are going to be yeah now all of them are going to be yeah now all of them are going to be reported on every single reported on every single reported on every single this is only like it's high profile it's this is only like it's high profile it's this is only like it's high profile it's a big bank but also like you know pretty a big bank but also like you know pretty a big bank but also like you know pretty much nobody the only instance I could much nobody the only instance I could much nobody the only instance I could find where any any depositors ever had find where any any depositors ever had find where any any depositors ever had lost any money was in the indac failure. lost any money was in the indac failure. lost any money was in the indac failure. There's been hundreds and hundreds of There's been hundreds and hundreds of There's been hundreds and hundreds of failures where like people don't lose failures where like people don't lose failures where like people don't lose their deposits. It's not coming. And their deposits. It's not coming. And their deposits. It's not coming. And actually in SVB, I believe that I actually in SVB, I believe that I actually in SVB, I believe that I actually don't think depositors would actually don't think depositors would actually don't think depositors would have lost any money in the long term.

have lost any money in the long term. have lost any money in the long term. Even for this situation, Even for this situation, Even for this situation, I just wouldn't have happened. Like it I just wouldn't have happened. Like it I just wouldn't have happened. Like it just just just SVB had the assets to cover it. It just SVB had the assets to cover it. It just SVB had the assets to cover it. It just would have taken a while to sort it out. would have taken a while to sort it out. would have taken a while to sort it out. A lot of time and like a ton of A lot of time and like a ton of A lot of time and like a ton of other banks would have gone under. other banks would have gone under. other banks would have gone under. Yep. Yep. All right. Last question and Yep. Yep. All right. Last question and Yep. Yep. All right. Last question and then we'll wrap. And as a reminder, if then we'll wrap. And as a reminder, if then we'll wrap. And as a reminder, if you like this type of video as well as you like this type of video as well as you like this type of video as well as learning how to build and grow your own learning how to build and grow your own learning how to build and grow your own startup, make sure to like it and startup, make sure to like it and startup, make sure to like it and subscribe to the channel. Jay on YouTube subscribe to the channel. Jay on YouTube subscribe to the channel. Jay on YouTube asks, "Sorry for the tinfoil hat asks, "Sorry for the tinfoil hat asks, "Sorry for the tinfoil hat question. Do either of you get a gut question. Do either of you get a gut question. Do either of you get a gut feeling that there was something bigger feeling that there was something bigger feeling that there was something bigger going on here, aka someone driving the going on here, aka someone driving the going on here, aka someone driving the bank run intentionally for their own bank run intentionally for their own bank run intentionally for their own gain?" gain?" gain?" So there's rumors that basically um some So there's rumors that basically um some So there's rumors that basically um some of the same people who were like of the same people who were like of the same people who were like encouraging folks to withdraw their encouraging folks to withdraw their encouraging folks to withdraw their portfolio companies to withdraw had portfolio companies to withdraw had portfolio companies to withdraw had short positions on the bank. short positions on the bank. short positions on the bank. Um I I haven't heard anything other than Um I I haven't heard anything other than Um I I haven't heard anything other than rumors on that. So I don't know. rumors on that. So I don't know. rumors on that. So I don't know. I wonder if there will be an invest you I wonder if there will be an invest you I wonder if there will be an invest you know if there's rumors then I bet the know if there's rumors then I bet the know if there's rumors then I bet the Fed somebody in the you know where the Fed somebody in the you know where the Fed somebody in the you know where the attorney general's office has to be attorney general's office has to be attorney general's office has to be Yeah. because it's that's not legal and Yeah. because it's that's not legal and Yeah. because it's that's not legal and so so there's there's that. But yeah, I so so there's there's that. But yeah, I so so there's there's that. But yeah, I don't I I hope not, but I I wouldn't be don't I I hope not, but I I wouldn't be don't I I hope not, but I I wouldn't be super surprised if something like that super surprised if something like that super surprised if something like that did happen.

did happen. did happen. Yep. All right, and that is it for the Yep. All right, and that is it for the Yep. All right, and that is it for the questions today. Thanks everyone for questions today. Thanks everyone for questions today. Thanks everyone for joining us. We love to do these topical joining us. We love to do these topical joining us. We love to do these topical and timely live streams when things like and timely live streams when things like and timely live streams when things like this come up. So, final reminder, this come up. So, final reminder, this come up. So, final reminder, subscribe to the channel, like the video subscribe to the channel, like the video subscribe to the channel, like the video if you like this kind of stuff. if you like this kind of stuff. if you like this kind of stuff. Annervet, thanks so much for taking time Annervet, thanks so much for taking time Annervet, thanks so much for taking time out of your day. He's supposed to be at out of your day. He's supposed to be at out of your day. He's supposed to be at South by Southwest, folks. South by Southwest, folks. South by Southwest, folks. I am at South by Southwest. I'm just I am at South by Southwest. I'm just I am at South by Southwest. I'm just stuck in, you know, Airbnb doing stuck in, you know, Airbnb doing stuck in, you know, Airbnb doing sitting in a hotel room doing a live sitting in a hotel room doing a live sitting in a hotel room doing a live stream instead. Yeah, it's awesome. It's stream instead. Yeah, it's awesome. It's stream instead. Yeah, it's awesome. It's uh good to see you, man, and great to uh good to see you, man, and great to uh good to see you, man, and great to see everybody. And we'll see you next see everybody. And we'll see you next see everybody. And we'll see you next time. time. time. Bye.