5 tips for startups after silicon valley bank collapse

Silicon Valley Bank has been in a financial turmoil over the past few days after concern escalated among founders and venture capital investors earlier last week after Silicon Valley Bank surprised the market by announcing late last Wednesday that it needed to raise $2.25 billion in shares.

silicon valley bank collapse

And the American bank said earlier last week that it was forced to sell all its bonds available for sale at a loss of $ 1.8 billion with the withdrawal of its novice clients, which prompted some depositors to rush to withdraw their deposits last Thursday, which led to the collapse of the bank’s operations and a sharp decline in Stock prices reached 60%, and the US authorities announced the closure of the bank the next day.

Silicon Valley Bank is the biggest victim so far of high US interest rates, which is one of the most popular banks for emerging companies in the world, as the decision to close it from the US authorities on Friday sparked a state of fears that the United States exceeded to a number of other countries in the United Kingdom, China and Canada. and India, where start-ups around the world faced the prospect of losing billions of dollars in deposits.

However, in quick moves to solve the crisis in America and abroad during the last hours, the US authorities announced a number of steps to guarantee the funds of depositors, whether in the collapsed Silicon Valley Bank or in other banks, in anticipation of any circumstances that might lead to a recurrence of the crisis of the collapse of this bank.

And the Federal Deposit Insurance Corporation stated that all insured depositors will have full access to their insured deposits no later than today, Monday, March 13, 2023.

The Deposit Insurance Corporation will also pay uninsured depositors an advance return within this week, and uninsured depositors will receive a custody certificate for the remaining amount of their uninsured funds, according to its statement.

And the Federal Reserve announced on Sunday that it will provide additional financing to eligible depository institutions to help ensure that banks have the ability to meet the needs of all depositors, explaining that this measure will enhance the ability of the banking system to protect deposits and ensure the continuous provision of funds and credit to the economy.

HSBC Bank Holding Group also announced that its subsidiary in the United Kingdom, "HSBC Bank UK", acquired the branch of the American Silicon Valley Bank in Britain (SVB UK) for £ 1, according to a group statement on its website today, Monday.

Here are 5 tips for startups to minimize the damage caused by the current economic volatility due to the Silicon Valley Bank collapse:

1- To have several bank accounts, so do not rely on one bank account, no matter how big, good and comfortable the bank is.

2- If you can afford it, always put money at the insurance limit.

3- If you work in one country and your bank is in another, keep your subscriptions and payments in a separate account from the main account to plan for the worst.

4- It is important for startups to buy some gold bars and keep them in a safe place in anticipation of financial fluctuations, as gold is easy to sell, maintains its value, and is not affected by currency devaluations much, and if all accounts fail, at least you can get some money that you get from selling gold.

5- Get as many experienced team members as possible to motivate them to stay with the team even if the cash runs dry.