Like many of you, the team at TempoCap have been closely following the events surrounding the collapse of SVB US/UK.
Given the understandable concern this development has caused, our Venture Partner, Pierre F. Suhrcke has put together key lessons and prudent advice to startups and founders on how to mitigate banking risks and protect yourselves from such disruption in the future.
1️⃣ Diversify your banking relationships. Preferably a minimum of 2-3 with at least one major, top-rated bank.
2️⃣ Avoid requests from debt providers which try to force you to transfer all deposits to their bank.
3️⃣ If you have just completed a fundraise, or have excess cash on your bank account, you may consider investing in short term government securities. Assets such as government bonds in custodial accounts are client property, and in the event of bankruptcy, all such assets are usually ring-fenced in their entirety and released to the customer.
4️⃣ Check the exposure of your major suppliers to certain banks and financial institutions. For example, even if you have no direct exposure but your external payroll provider does then you are potentially at risk.
5️⃣ In the digital age, bank runs can happen at ‘light speed’. Adopt a position of constant vigilance and be prepared for emergency measures.
Feel free to reach out Pierre F. Suhrcke if you have any questions or want to chat privately about any of the above.
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