SVB Is Dead. Long Live SVB.

We all know how it began. It started on March 9, when the run on Silicon Valley Bank made the innovation economy totter and threatened a global financial crisis. It continued on March 10, when SVB failed and it became clear that anyone who hadn’t gotten their money out yet was stuck, facing payroll in just five days with no clear way to meet it. I cannot recall how many times I told founders, “It will be all right.”

The U.S. government’s decision on March 12 to tap the Deposit Insurance Fund and rescue all of SVB’s depositors was therefore welcome and the right choice. It protected not only the $175 billion at SVB, but perhaps 10 times that amount of total economic activity. In combination with a similar lifeboat offered to Signature Bank and a promise by the Federal Reserve to fund depositors at other imperiled U.S. financial institutions, it prevented the spread of a contagion to other banks.

In the aftermath, there will be time for vituperation and inquests that will attempt to answer who was at fault and how future bank runs can be avoided. Today, the question I keep getting asked by the founders we work with is, “Should we continue to bank at SVB?”

The answer is yes.