A 10-step playbook for founders with Silicon Valley Bank accounts

Yesterday, the U.S. skilled its second-largest financial institution failure in historical past. Within the know-how world, Silicon Valley Financial institution (SVB) was one of many largest banks supporting small companies, however immediately, tens of 1000’s of depositors are unable to entry capital.

This isn’t the primary time I’ve witnessed a funding crunch. I’ve been constructing know-how companies for greater than 20 years: 15 years in software program/web and 5 in superior {hardware}. Beforehand, I based Archer Aviation, which went public in 2021 for $2.7 billion. Previous to that, I based Vettery, which was acquired for $110M.

In 2020, when COVID-19 hit, I used to be elevating my Collection A for Archer and the enterprise funding setting utterly floor to a halt. Inside 48 hours, each single assembly I had was canceled.

Whereas I hope for the perfect for firms banking with SVB, it’s vital for founders and CEOs to plan for the worst. This would be the weekend that differentiates entrepreneur from a foul one.

Here’s a 10-step playbook for founders and CEOs that may enhance your organization’s odds of success:

1. Get to the workplace

This weekend, you’re within the conflict room. Spend the time constructing a considerate plan primarily based on the various eventualities that might play out. It’s finest to organize for the worst, keep calm, and execute with precision.

The aim of this session is to thoughtfully doc a plan that may prolong the money runway, set up speaking factors for worker communication, and establish any levers you’ll be able to pull instantly to preserve money.

2. Construct an inner three-person tiger group

This group ought to include the CEO, monetary management, and people who lead general product and folks operations. Small groups make it simpler to speak and transfer shortly however a mentor who has expertise navigating enterprise cycles like this one is also useful.

The aim of this group is to increase remaining money available for no less than 30 days with the hope that uninsured depositors will see excessive restoration charges shortly. The longer your runway, the upper your odds of success.

3. Begin speaking with traders now

In case you want extra capital than the Federal Deposit Insurance coverage Company (FDIC) insures, get in contact with present traders and be clear about your SVB publicity. Be direct: ask if they’re ready to wire money to cowl your capital wants, even when it means with no phrases in place.

I might additionally begin constructing a listing of each non-current investor in my community and be ready to make contact with them on Monday morning. Work to trace all of this so you’ll be able to keep organized in case deposit settlements take a number of weeks.

You’ll discover that good traders will step in to assist as a result of they perceive that this example is not going to final eternally. Your ask is to get them to lend new cash or purchase deposit claims outright. If issues go south, you don’t need to be one in every of 40,000 firms calling traders on Monday.