‘Instability and Chaos’: What SVB and OpenAI Taught Us

Many investors entered 2023 expecting a holdover of the past year’s doldrums: little dealmaking (except for artificial intelligence), cratering valuations and a growing number of down rounds. They weren’t disappointed—but few if any of them predicted the events that really defined venture capital and startup investing this year: the March collapse of Silicon Valley Bank and the boardroom coup at OpenAI.  

The catalysts for both were quite different. SVB was an early victim of the Federal Reserve’s aggressive rate moves, while OpenAI CEO Sam Altman was a casualty of his company’s own convoluted structure and its appointed nonprofit board. But certain factors bind both events in a way that offers lessons for all startups and their investors, especially around power and boards. 

For instance, Rippling CEO Parker Conrad said the SVB crisis prompted founders who used to “stick to their own knitting” to pay attention to broader economic impacts, a result of the domino effect on the startup economy caused by the bank’s collapse. Conrad should know. The SVB crisis caused him to raise $500 million in emergency funding to help customers meet payroll.