[chernevik]

The question for the VCs is not, "why did you advise your portfolio companies to leave SVB?" It is, "why did you not advise your portfolio companies to hold their capital in a t-bill money market?"

This obvious step for capital protection was somehow neglected by venture capital firms who pride themselves on advising their portfolio on a host of mundane business issues. A VC would be considered mad if one of its companies didn't run financing docs through a lawyer, or handled payroll on its own. This should have been one of the most obvious and simple items on the checklist. Yet somehow it was not.

Why not?

The failure of any bank should have been a shruggable matter for every startup funded with capital. Instead it was portrayed as an existential issue for all. (This was entirely and obviously false, but let that pass.) If it were an existential threat that was a lapse of the VCs supposedly guiding these business novices.

I very much suspect that the hue and cry for a bailout was driven in part by VCs eager to cover this lapse. And to suppress attention on the relationships with SVB that lead them to recommend their companies provide SVB with cheap deposits rather than prudently protect their capital.

The answer to a bank run is not "stand by your bank". It is "be indifferent to what happens to your bank in the first place".