Silicon Valley Bank (SVB) remains a touchstone for startups, investors, and anyone who follows technology finance. The disruption around SVB triggered widespread reassessment of how fast-growing companies manage cash, bank relationships, and contingency planning. The biggest practical takeaway: bank choice and cash strategy matter as much as fundraising.
Why SVB mattered
SVB was a specialized financial partner for many startups and venture funds, offering tailored loans, venture debt, and industry expertise. That close alignment made SVB a natural primary bank for many high-growth companies—but it also concentrated operational and counterparty risk. When that risk materialized, the speed of deposit outflows exposed vulnerabilities that were previously theoretical.
What startups and investors should do differently now
– Diversify banking relationships: Treat multiple banks as part of a core treasury strategy. Split operating cash across institutions to avoid exceeding deposit insurance limits at any single bank, and maintain at least one alternative institution that can handle payroll and vendor payments immediately.
– Know deposit insurance limits: Federal deposit insurance covers deposits up to the standard limit per depositor, per insured bank, for each account ownership category. For balances above that, explore insured solutions such as networked deposit programs that place funds across multiple banks.
– Use cash-management tools wisely: Sweep accounts, brokerage cash management offerings, and pooled deposit services can increase effective insurance coverage and improve liquidity. Understand the trade-offs—brokerage cash accounts are often covered by SIPC rather than FDIC, and money market funds are investments, not insured deposits.
– Maintain a robust runway and contingency plan: Extend cash runway where possible through cost discipline, staged hiring, or bridge financing. Keep documented contingency steps (e.g., alternative payroll arrangements, CFO-approved wire authorities, emergency signatories) and rehearse them.
– Strengthen banking documentation and access: Ensure that multiple executives have appropriate account authorities, dual approval for critical transfers is in place, and that all signers can access online banking—including backup authentication methods.
– Communicate proactively with stakeholders: Founders and CFOs should brief boards, lenders, and key vendors about cash positions and contingency plans. Transparent communication reduces panic and preserves credibility.
– Consider a mix of funding sources: Venture capital, venture debt, and revenue-based financing each have different timelines and covenants.
A balanced mix reduces dependence on any single funding channel during market stress.
Broader changes to expect
Regulatory scrutiny and risk management practices have tightened for regional and specialty banks, with greater emphasis on liquidity stress testing and deposit concentration monitoring.
For startups and funds, the market now expects more rigorous treasury operations and more conservative cash holdings.
Practical checklist
– Open accounts at two or more insured banks.
– Verify and document deposit insurance coverage for each account.
– Set up an emergency payroll account with a separate institution.
– Implement daily cash reporting and weekly cash forecasting.
– Review vendor payment terms and negotiate flexibility where possible.
– Map signers and access methods; ensure offsite backups for credentials.
Adapting to a more risk-aware funding environment will protect operations and preserve optionality. Smart treasury practices are now a strategic advantage: they lower interruption risk, support faster decision-making under stress, and help companies focus on growth rather than firefighting.