salesjoe

So how bad is the SVB fallout going to be?

With SVB holding almost half of the start-up ecosystem funds in various accounts how fucked is the SMB/MM space going to be?

I would assume EntCo's are hopefully banking with the big banks but has anyone heard?

Should I prepare for the Q2 '23 to be even worse than Q4 2022?

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poweredbycaffeine

WR Lieutenant

☕️

Give that the FDIC stepped in along with the SEC, the end game pain should be avoided if large deposit businesses (more than 250k on deposit) acted fast enough. For example, Rippling moved their accounts and they are a massive HRIS player.

I don’t think we can predict the fallout of Q2, but the run on SVB was based on shitty self-serving bets that did not pay off for the leadership team.

braintank

Politicker

Enterprise Account Executive

There are a lot of companies who have cash in svb money market accounts (not fdic insured).

And plenty of companies who will burn through FDIC insured $250k in one payroll cycle.

Plus lots of startup's use SVB for accounts receivable. Now they can't get paid by customers until they find a new bank.

Also anyone with venture debt financing is fucked.

Dis feels like Lehman bros for tech bros...

poweredbycaffeine

WR Lieutenant

☕️

They could have used some of your brain in their evil debtlord think tank.

1nbatopshotfan

Politicker

Sales

The last I read, they did have the assets to cover liabilities so the wind down should be relatively fine? I’d guess some big choppiness in the next two weeks and the smoothing sailing.

Please do screenshot this and put in the bad take hall of fame if/when I’m wrong.

I will say the one upside here is watching a bunch of douches who flipped about student loan relief “demand” that the FDIC cover all deposits no matter how large. Bailouts for me but not for thee.

CuriousFox

WR Officer

🦊

👏👏👏

salesareup

Good Citizen

Sr. Enterprise Account Executive

Can you elaborate on “anyone with venture debt financing is fucked”? Asking for a friend

poweredbycaffeine

WR Lieutenant

☕️

Their facility is now shut down. Debt financing is often a draw account, and now that it’s no longer available, and the loan cannot be serviced, the funds must be found elsewhere.

CadenceCombat

Tycoon

Account Executive

Bloodbath

braintank

Politicker

Enterprise Account Executive

Bad

Maximas

Tycoon

Senior Sales Executive

Unfortunately, so far it appears to be the case, hopefully something else might prove us wrong!!

Need to wait and C what the future is holding!

Diablo

Politicker

Sr. AE

It’s definitely not a good news

GingerBarbarian

Opinionated

Lead Sales

I think the SVB collapse is more of a symptom of the issues we see in SaaS as a whole. So many SaaS companies are not profitable. They are trying to blitzscale and are almost never able to make it to being a profitable company. Take a look at all the publicly traded tech companies out there that have a negative EPS.

So many of these companies are built like Ponzi schemes that require constant cash flow. Just look how heavily ARR is weighted in acquisition pricing. Now that interest rate have come up, the era of cheap cash is ending. This will have a massive impact on the tech world as a whole.

GDO

Politicker

BDM

It will be fine. Maybe they even start thinking about risks more

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salesjoe

So how bad is the SVB fallout going to be?

13 comments

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