In the wake of Silicon Valley Bank’s collapse, followed by the FDIC’s decision to make good on all SVB deposits (even if they were uninsured), I’ve seen one pundit after another describe the situation as nothing more than a bailout for the rich. Follow certain accounts on Twitter and you might think that SVB’s client list consisted exclusively of libertarian billionaires.
Now if their criticism was aimed solely at rich investors, I might not say anything publicly. No one’s going to shed a tear for the venture capital firms–and no one should. If someone wants to talk about how our industry’s herd mentality contributed to SVB’s fate, that’s only fair.
What isn’t fair, however, is acting as if everyone with an SVB account is the same–failing to distinguish between creditors and depositors, or between large and small businesses. It’s easy to paint situations like this with a broad brush if you believe they only affect the rich–but why should we lose empathy for hardworking people just because of where they bank?
Yes, when Eniac invests in a startup, we believe it could become the next unicorn or decacorn, and that it should make its founders wealthy in the process. But even as we hope our portfolio is full of future Jobses and Zuckerbergs (but better!), the key word is future.
While SVB hasn’t released a detailed breakdown, I’ve been told that the bank had thousands of depositors with fewer than 20 employees. The current reality for those depositors involves scrappily leading small teams to pursue their vision of building something transformative when they could probably be working less and making more money if they were at one of the big incumbents. Today, America’s mom-and-pop businesses are led by these entrepreneurs who are building companies in climate, healthcare, fintech, and more.
These are the founders our team has been talking to, listening as they strategized about how to ensure their small business’s survival beyond the coming weeks, and as they agonized over what this would mean for their teams. Their employees were suddenly left wondering if they’d actually receive their next paychecks, or if they might lose their jobs.
These are stories for the founders, not me, to tell. Most of them, of course, have been more focused on keeping their company afloat than on external communication. So I’ve been grateful to those few who have been willing to publicly share their experiences:
- Sara Mauskopf, the co-founder and CEO of Winnie, who scrambled to raise $200,000 in payroll and put charges on her personal credit cards to keep her business going.
- Lindsay Michaelides, the founder and CEO at Strongsuit, who explained that she’s “not the tech-elite” but rather “a mom in Ohio who gets up every day and works as hard as [she] can to raise good humans and to build something that will make the world better for all our kids.”
- Vanessa and Kim Pham, the founders of Omsom, who noted that when large institutions make changes, it’s “oftentimes the smallest + most marginalized groups who feel the impact the heaviest”
Criticize the billionaires and the VCs all you want–but remember that they’re not the majority of depositors affected by the news. Many future American innovators breathed a sigh of relief when they realized that their companies would live to fight another day and they could continue to employ the hard-working team members who depend on that paycheck to put food on the table.
Nihal Mehta is a co-founder and general partner at Eniac Ventures.
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