How fintech entrepreneurs navigated the SVB collapse

Stacey Edgar’s phone exploded on Thursday.

“Text, Slack, Twitter, everyone went crazy. It started early in the day on Thursday and I was just getting texts from other founders,” explained Edgar, founder of Venteur, a San Francisco-based insurance company, and a longtime client in Silicon Valley Bank. “I got emails from investors, and basically everyone was saying, ‘Withdraw money now.'”

She had realized there was a problem that morning when she tried to log into her account. and it was all locked.

“It’s a terrible way as a business owner to find out something is going on,” she said.

Meanwhile, executives at Unest, a fintech focused on investment accounts for children, were in full swing in the same kind of talks, making a last-minute transfer of some of their funds — enough to ensure they would meet pay that week — to accounts elsewhere, Chief Operating Officer Mike Doniger said.

When Edgar tried to take the money from Venteur’s SVB account, however, she was an hour late, and she was one of many.

It took the Federal Deposit Insurance Corp. her announcement that uninsured funds would be guaranteed for the chatter across her messaging platforms to stop.

While the FDIC’s decision to support uninsured funds brought relief, tensions have not completely subsided. Atomic CEO David Dindi told Banking Dive that uAfter hearing the news that deposits of over $250,000 were indeed safe, his team felt a sense of relief and happiness. But Doniger explained that he continues to monitor the news, and his concern that there could be a ripple effect.

To stay or to go?

Unest moved its funds to First Republic, and is in the process of establishing relationships with other banking partners. Adam Struck, a fintech investor with 14 portfolio companies, moved his funds to JPMorgan and Morgan Stanley, the latter with which he already had a relationship.

Dindi had proactively transferred Atomic’s assets to its own platform, with Bank of New York Mellon as the underlying custodian; and since Thursday he has helped other founders transfer millions of dollars in assets to BNY.

Doniger’s decision to move to First Republic was largely tied to already established accounts there, which allowed the funds to move quickly

““Adding more relationships and diversifying is the smart thing to do to ensure we have options available in case there are other emergencies and access to our funds when needed,” Doniger said.

He said he believes the biggest beneficiaries of the situation, however, were big banks, including JPMorgan, Citi, Wells Fargo and Bank of America.

Struck mirrored the same sentiments, which he called “unfortunate”.

“The regional banks exist for a reason, specialty banks exist for a reason,” Struck said.

Edgar, however, is staying put for now. SVB has been “very communicative” since Monday, she said, and the personal touch the bank has always offered continues to set it apart from its peers. The personal touch was even still there on Thursday and Friday, she said from the main point of contact, although they didn’t have all the answers.

“I feel pretty good about the bank at the moment,” she said on SVB. “Also, one of the things about moving to another bank, I’ll spend a little more time than I did doing due diligence. We’re very thoughtful about what our overall risk management strategy is in terms of treasury management.”

Edgar was lucky enough to have diversified her cash before SBV’s collapse, not because she expected its demise, but because, she said, her coming of age at the London School of Economics was during the 2008 financial crisis, and some of her practices are due of paranoia built from that time. In addition, she wanted to separate operating assets and product funds.