Startups Seek to Raise Emergency Cash from VC Firms, Secondary Sales

As the weekend approached, startup founders with money stuck in Silicon Valley Bank raced to sell secondary shares and enter financing deals to meet payroll and other needs, a sign of the desperate dash for funds set off by the abrupt collapse of the tech-centric bank.

Many startup founders on Friday signed up for new loans based on the future revenues of their companies, according to Nathan Latka, CEO of Founderpath, a startup that offers this type of financing. Others heard from their VC backers, who said they could provide short-term cash. Menlo Ventures is planning on offering loans to portfolio companies that need to make payroll, Matt Murphy, a partner at the firm, said. Murphy said other large venture firms have committed to or are planning on doing the same.

And in some cases, founders sought to stanch their own personal losses. Omeed Malik, founder and CEO of Farvahar Partners, an investment bank that specializes in secondary share sales, said that founders were calling all day on Friday trying to sell their shares to shore up personal cash positions amid a growing worry about their business prospects. “They need cash in their pocket now,” he said.