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Ok, so here is the land. That is a sweet land, you could say.
This weekend has been a busy one with the fall of a certain Silicon Valley bank. You couldn’t go anywhere this weekend without listening to dozens of conversations and realizing that everyone in San Francisco was an expert on FDIC and national bank bailouts, so that’s good(?) news(??).
In Friday’s special edition of the Daily Crunch, we round up what had happened so far, but a lot more has happened (literally, spiritually, and figuratively) since then, so here’s my best shot at keeping you Sanguinely, Vitally Briefed.
natasha m. I summed it up well: It’s been a surreal weekend. AND ScholarshipThe exploration of what the SVB collapse means for risky debt (TC+) is also worth reading.
— Haha
The summary of TC BLS
Take a deep breath, because there’s a lot of information coming down this fire hose right now. A great place to start is Alex and Natasha trying to unpack the whole situation on today’s episode of the Equity podcast.
What will you do next? Figure CEO Brett Adcock wrote the excellent playbook for founders with Silicon Valley Bank accounts for TC+.
The broader TechCrunch team has loads of news, analysis, and context. This is what happened in the last few days:
- The dominoes are wobbling: First Republic bank halted trading as its shares went into free fall after SVB demise, while Mercury expands FDIC insurance up to $3 million via new Vault product. Regulators also shut down cryptocurrency-friendly Signature Bank. Even as the wheels are coming off, regulators have asked SVB employees to stay on for the next 45 days to help clean up the mess.
- But we’re good though, right? Good?: The Federal Reserve announced that Silicon Valley Bank depositors will be fully protected, although in the fast-paced world of startups, where wages must be paid, every hour counts, and it’s unclear whether the Federal Reserve can act fast enough. Treasury Secretary Janet Yellen said Sunday that the US government would not bail out Silicon Valley Bank. And Combinator, in turn, called on Congress to act on the collapse of SVB.
- So about that “added value”: Venture capital is important to talk about value addition, and many of them have a considerable reserve of cash. This, it seemed, was his chance to shine. Sam Altman, Vinod Khosla and other top VCs say they will personally lend cash to startups as a short-term bolster measure to cover payroll and other expenses as the situation resolves. In other parts of the value chain, the ecosystem is also appearing. Deel, for example, is making more than $120 million available to support his clients, and Brex’s chief executive sprang into action, trying to raise more than $1 billion to cover bridging loans to keep startups running. .
- Adopt is what we do: The startup ecosystem may depend on banks, but it was also agile in reacting to the crisis. Etsy began processing seller payments through alternative partners, while some major players in the ecosystem, including Life360, Sezzle, Unity, and AppLovin, disclosed their exposure to SVB in new statements. Roku, Roblox and others revealed their own exposure.
- a fire sale: It seems the burning remains of the bank are being dished out and SVB Financial is reportedly looking for a buyer for SVB Securities and its arm SVB Capital VC, and an FDIC auction is said to be underway for the assets of BLS.
- international ramifications: It was not only in Silicon Valley where echoes were heard. The whole debacle is sending China’s start-up industry into a panic, and in a historic last-minute deal, HSBC bank acquires Silicon Valley Bank UK, reassuring customers that all depositors’ money is safe. The response from the UK tech ecosystem illustrates just how disruptive the failure of the bank is, reaching abroad. International regulators froze SVB’s assets in international branches in Canada and Germany, and the fallout is hitting many Indian startups.
- SVB turns off, BTC turns on: We cringed quite a bit from the “if it was all in crypto this could have been prevented” hot takes, but crypto doesn’t give a damn about our shame, and jumped 18% in the wake of the SVB crisis, jaquelyn informed.
- could have been avoided: Investor Mark Suster says a “handful” of bad actors in VC destroyed Silicon Valley Bank.
The SVB collapse was also covered with additional context and analysis in our other newsletters. For example, check out this week’s fintech newsletter, The Interchange.
Startups and VCs
In non-bank news-collapse:
Creating a PLG move in addition to usage-based pricing
Image Credits: miguelangelortega (Opens in a new window) / Fake Images
Last July, Puneet Gupta, a former AWS CEO who is now CEO and co-founder of Amberflo.io, wrote a TC+ article explaining how SaaS startups can embrace a usage-based business model.
In a follow-up posted today, he shares four tactics teams can use to collect, analyze, and leverage customer data to take the guesswork out of pricing decisions.
“When it comes time to make product packaging and pricing decisions, the first place to turn should be the historical usage data measurement pipeline,” he writes.
Three more from the TC+ team:
TechCrunch+ is our membership program that helps start-up founders and teams get ahead of the rest. You can sign up here. Use code “DC” to get 15% off an annual subscription!
big tech inc
Block monitoring firm PeckShield sent an ominous tweet directed at crypto lending platform Euler Finance, simply saying, “Hello, you might want to take a look.” Lawrence reports. A series of transactions indicated that there was an ongoing hack against Euler.
A few more to keep you busy:
