Fintech Horror Stories - The far-reaching impact of SVB’s collapse
The bank is now closed, but its loss is just beginning to impact startup employees (and more).
As we enter the weekend, the further/downstream fallout from SVB’s collapse is beginning to be felt. While a chain reaction of bank runs and a full-blown market breakdown have yet to occur and have likely been averted, there are microeconomic effects that folks are talking about, specifically payroll for those companies that banked with SVB (putting it in perspective, they were the banking partner for over 50% of all startups in the US) or other companies that paid out to partners/individuals/1099s using funds parked there. Rather than spend time doing deep analysis, I thought I would devote today’s article (which wasn’t originally scheduled but feels necessary) to showing the effects of what has happened (and continues to happen) on people (and institutions) who have nothing to do directly with fintech, risk, analysis, VC, or banking, don’t work for SVB, and are just regular folks trying to earn a living who happen to be working for small companies.
Startup Employees on Payroll:
Neighborhood Operations
Gig economy creators
Other companies that will likely be impacted next week based on 8-K filings
Track the above live on the SEC’s website here.
In closing (for now):
One idea - many financial institutions get a bad rap, but they have their moments, i.e. when natural disasters hit, many of them have internal policies/procedures to suspend late fees/charges for affected consumers. To me, this seems like a perfect (and easy) opportunity for credit card companies to temporarily suspend late fees/overdraft/interest on accounts for customers who worked at the impacted companies.
Otherwise - there have been various proposals and actions in isolation from various VCs, private individuals, and others - but I’ll highlight a positive effort from Capchase which is trying to raise around a billion to help founders of the impacted companies for the primary purpose to make sure they make payroll. If you are reading this and are a founder or impacted in any way, take a look at this form.
Good luck, everyone.