[lr4444lr]

Pardon my ignorance, but why would VC backed companies not have CFOs and general VC advice against putting all or even a majority of their funds in a single bank? Why would they not split it among several mid to large sized banks?

[Edited for typo]

[mbesto]

What you're referring to is called "treasury management". Roku is not a VC backed startup (it's a public traded company) and they held nearly $500M in cash in SVB (idiots).[0]

HN'rs love to criticize financial analysts, but this is precisely the thing that they would typically look at (whether they actually did on Roku is another question) when analyzing the overall value of a business. Meaning, they don't just look at the company's financials, but also the management team, their performance, their controls, processes, etc. (and arguably their treasury management). We also love to criticize MBAs and finance people, but this is exactly the type of thing that is optimized with experienced business/finance professionals.

You might be thinking "how on earth does X big company operate this way?". The same way a company like Equifax who literally provides all of its FICO scoring via computers, was running outdated Java components that led to a serious ransomware hack.

[0] - https://www.cnn.com/2023/03/10/business/roku-svb-cash/index....

[jimnotgym]

Indeed.

I suspect vcs were telling the companies to bank with svb as some sort of mutual backscratching.

[eunos]

From a reddit AMA (dont have the link sorry), IIRC small startups dont have enough manpower to hedge their finance and more or less discouraged to hire finance teams (just focus on your product!).

[lxgr]

There are treasury products available that do it for you, both by distributing deposits across multiple FDIC-insured banks or by buying short-term treasuries.

[fblp]

I'm sure some VC firms also encouraged their portfolio to bank with SVB. They were regarded as the most "startup friendly" bank.

[bagacrap]

SVB was a large bank fwiw

A lot of their contracts with SVB involved exclusivity clauses apparently. I'm not sure what SVB gave them in return.

[gumby]

It’s a pain to do. They should have a small amount (basically the next month or so, plus payroll a couple of days before payroll), then just keep the rest in the MM/commercial paper.