:"This was not so much a classic large-scale bank run in which mass psychology played its part on a grand scale, but a bitchy high-school playground in which the cool thing to do was to bank with SVB until it no longer was."the bank's weak balance sheet and even weaker oversight for months. The true revelation here is the utter lack of financial acumen among Silicon Valley's supposed top minds.
"I think we have proven that the average CFO/Treasurer in the venture world doesn't know how to read a balance sheet," a billionaire hedge fund manager cracked to me over email. And if the VCs who are supposedly providing sage advice don't know how to manage basic business risk, how are they supposed to teach their portfolio companies?
For the startups and businesses that had their money in Silicon Valley Bank, this panic should trigger a meaningful conversation about what it means to be a mature company. The pressure to secure the next round of funding means that while startups grow fast, they may not have time to develop. Perhaps if portfolio companies were allowed to slow down a bit earlier in their life cycles — building the proper financial infrastructure — similar disasters could be avoided.
lopezlinette The True lesson, is that no matter how risky the behavior is, the Feds will bail you out if it fails, and will do so at the expense of the middle class.
Silicon Valley Bank imploded in part because it was a repository for the riskiest behaviors of the industry it serviced, Lopez writes.