They become illiquid because they don't have access to their money that was in SVB. They can't make payroll, can't pay vendors and landlords. The employees will leave first. Vendors next.

But normally, they will be bought by another bank coming Monday and resume business. The fdic assigns a buyer and pays the buyer, from what I understand.

Edit. I just realized, in the us, if there is no bidder, the fdic can close down the bank or run it itself.

Bridge loans, DES, convertible notes, etc..., I'm sure their were loan "products" for startups similar to helocs (likely what put them in the hole). The appetite for crypto/fintech startups was huge during the pandemic and likely pressured them to get creative on products and overleveraged. It's all unwinding now.

Unfortunately, harder now for startups, mind that all those startup dreams from laid off FANG staff just got their rug pulled.

> likely what put them in the hole

No. It sounds like they bought a bunch of safe, long-term load-backed assets. When interest rates went up, the value of the assets went down. This isn't a problem if no one withdraws before the loans are due, but if they do, they have to sell the assets that declined in value.

For business banking, you want a bank that understands your business. SVB was in the first rank of banks that understood startups.

Many startups aren't particularly sophisticated financially and just kept their capital in cash in the bank.

What did James Ray say again about FTX? Something along the lines of "a group of highly unsophiscated people"? Man, the CFOs of the affected start-ups should all look for a new job. By the way, preventing things like that is something a good MBA does.

> James Ray

John Ray?

Yes, that's the one! I knew it was something with "J"!