The 2 Things VCs Really Want
January 3, 2025
When you take a multi-million dollar check from a VC, they’re really only looking for 1 of 2 outcomes. This can cause some very strange behavior in the future.
In the last two months, the banking sector in Silicon Valley has turned to dust. The loss of First Republic (FRB) and Silicon Valley Bank (SVB) leaves a giant hole that needs filling.
Aside from the monopolistic concerns in banking, many startups and tech investors relied on FRB and SVB because basic service at other banks was difficult. As a CEO, I experienced many account ‘locks’ at Bank of America due to ‘suspicious’ activity, such as paying bills and generating revenue. In recent weeks, we have seen multiple wire transfers canceled by Chase, without explanation, and we’re not alone. FRB and SVB allowed Silicon Valley to do business day-to-day, their absence will be felt.
Brex and Mercury are the most popular banking startups in tech right now, but they’re also having some (understandable) scaling issues, so be patient if you need personal assistance. Many startups have turned to the largest banks like UBS, Schwab and JPMorgan for some of their banking needs. You can also remain at the “new” SVB and FRB to see what happens. While there’s no longer deposit risk at FRB and SVB, their new owners’ plans are uncertain and change could occur rapidly.
I would love to see a Bay Area or Tech community bank emerge, perhaps as a non-profit or depositor-owned institution. The goal would be to provide great service to the startup community, rather than generate significant profits. A close model might be armed forces banks and credit unions such as USAA and Navy Federal.
What do you think is next for banking in Tech?
