Creator Economy Sherpa | Award Winning Curator, Moderator & Speaker | "Inside the Creator Economy" Newsletter | Board of Director | Geek
SVB Fallout UPDATE: The SVB bailout means that everyone who had money in the failed bank will be made whole by the FDIC's insurance accounts - even beyond the $250k limit. Phew. Still processing this - and updating today's newsletter. ---------------------------- A non-trivial percentage of creator economy startups have some or all their raised capital at Silicon Valley Bank, which just became insolvent. What will it mean to them – and to creators – if those companies can’t unlock more than $250k of their capital for a while? And what will happen long-term if they can’t get most of that capital back within a few months? Just speculating here, but four things come to mind. 1) Many creator economy startups won’t be able to make payroll next week and won’t be able to pay their bills either. 2) Even more will likely be squeezed over the next month or two and will face a cash crunch with possibly devastating results. 3) Even those who aren’t burning cash will still need to extend payment terms and will need new sources of working capital. 4) And those with venture debt – which was a big part of SVB’s business – may find that debt called and be unable to pay it back. The ramifications will come hot and heavy. Here are a few off the top of my head: ▶ Expect all discretionary spending to come to a complete stop. No travel, no parties, no gifts, no swag. ▶ Companies will try to clawback whatever they can. Subscriptions, dues, events, refundable travel, and much more. ▶ An immediate hiring freeze and/or layoffs. ▶ Creators that are owed money from at-risk startups should expect payment to stretch out – or vanish altogether. ▶ Some venture investors will rally and provide short-term funding to help their most promising startups. ▶ But startups with a bit of wobble and a shortage of cash will be ruthlessly starved. Right now, cash is truly king. Creators, employees, customers, and suppliers should be asking their creator economy partners about their SVB exposure. It’s not just startups at risk either. Roku had about $487 million (or 26%) of its cash and equivalents at SVB, and Roblox had about $200 million (5%) of cash and securities there as well. This might all blow over. One of the big banks could acquire what’s left of SVB and make everyone whole. The government could come in with a bail out. But you can’t count on that. Control what you can and plan for the worst. Aside, I was an SVB client as a first-time CEO at MCN Revision3. They were so helpful with advice and insight - and their venture debt saved us during the 2008 meltdown. So broken up over this. #litrendingtopics #creatoreconomy #svb # #startups
The #VC community is signing a petition in support of #SVB under the right conditions. But aren't they the same VCs that made a run on their hometown bank? https://lnkd.in/g7AJtzGV
The ripples of #SVB are already beginning. I got this note this morning from the wonderful folks at #campstore : Camp needs your help. Unfortunately, we had most of our company’s cash assets at a bank which just collapsed. I’m sure you’ve heard the news. We are hopeful that this will be resolved soon, but in the meantime we are turning to you, our most valuable customers, to help us. All sales from this point forward will deposit into Chase & allow us to generate the cash needed to continue operations so we can continue to deliver unforgettable family memories. Please help us by shopping Camp.com today and through the weekend. To catalyze sales, we’re offering 40% off of ALL online merchandise (excluding tickets & gift cards). You can use the code BANKRUN at checkout. Or you can pay full price without the code– which is also appreciated. Load up on cheap toys, birthday gifts, etc – all while helping CAMP…. Everyone wins? Thanks, Ben Kaufman Co-Founder
Today was a very scary day. I hope this contagion doesn't spread. 😞
Unfortunately this stark analysis is likely very true. The only silverlining is this could pave the way to buy cheap stock that will later recover back to regular rates. I’m looking at Roblox here 👀
Diversify diversify diversify
I understand your concerns regarding the potential impact of SVB's situation on the creator economy and beyond. However, I find it disappointing that the first reaction to this situation is to assume the worst and make sweeping statements about the entire industry. While it is true that some companies may need to cut back on discretionary spending and that there may be an immediate hiring freeze or layoffs, it is important to approach this situation with caution and not jump to conclusions about every company's response. Furthermore, it is unfair to suggest that creators are at risk of not receiving payment from at-risk startups or to assume that venture investors will only rally for the most promising startups. We should be supporting each other during this difficult time and not making baseless assumptions or generalizations. I encourage everyone to stay informed and ask questions, but let's do so with respect and empathy for those who are affected.
The feds will make all deposits safe, even above the $250k. The bank might be gone, that’s still unknown, but customers $$ will be okay
Holy sh*t, Silicon Valley Bank just went under in 24 hours flat, and a ton of creator economy startups have raised capital there. The fallout is gonna be gnarly, with companies unable to pay their peeps or keep their operations going. It's beyond messed up that one stupid statement from their CEO could cause all this damage. And it's not just the startups that are screwed - even established companies like Roku and Roblox have a ton of cash and securities at risk. It's crucial for everyone involved to hit up their creator economy partners and see what the hell is gonna happen next.
M&A and strategy advisory for creator economy | 3x founder and digital leader | Savannah real estate investor
1yThis is good analysis Michael Booth