For Your Information Blog: 13/03/23

Monday, March 13, 2023

HSBC buys Silicon Valley Bank UK, says 'customers should not notice any changes'

Monday, March 13, 2023

H'okay, so here's the earth. That's a sweet earth, you might say.

This weekend has been So Very Busy with a certain Silicon Valley Bank toppling over. You couldn't go anywhere this weekend without overhearing dozens of conversations and realizing that everyone in San Francisco was an FDIC and national banking bailout expert, so that's good (?) news (??).

In Friday's special edition of Daily Crunch, we summarized what had happened so far, but a lot more has gone down (literally, spiritually, and figuratively) since then, so here's my very best attempt at keeping you Sanguinely, Vitally Briefed.

Natasha M summarized it well: It's been a surreal weekend. And Becca's exploration of what the collapse of SVB means for venture debt (TC+) is well worth a read as well.

— Haje

Image Credits: Justin Sullivan / Getty Images

The TC SVB rundown

Take a deep breath, because there's a lot of info coming down this fire hose at the moment. A great place to start is Alex and Natasha trying to unpack the whole situation on today's episode of the Equity podcast.

What do you do next? CEO of Figure Brett Adcock wrote the excellent playbook for founders with Silicon Valley Bank accounts for TC+.

The broader TechCrunch team has a ton of news, analysis, and context. Here's what happened over the past few days:

The dominoes wobble: First Republic bank was put on a trading halt as its shares went into free-fall after SVB's demise, while Mercury expands FDIC insurance up to $3 million through a new Vault product. Regulators also shut down crypto-friendly bank Signature Bank. Even as the wheels are coming off, regulators requested SVB employees to stay on for the next 45 days to help tidy up the mess.
But we're okay, though, right? Right?: The federal reserve announced that Silicon Valley Bank's depositors will be fully protected, although in the fast-moving world of startups where salaries need paying, every hour counts, and it's not clear whether the fed can move quickly enough. Treasury secretary Janet Yellen said on Sunday that the U.S. government would not bail out Silicon Valley Bank. Y Combinator, in turn, called on Congress to act on the SVB collapse.
So about that “value-add”: Venture capital is big to talk about value add — and many of them are sitting on a sizable stockpile of cash. This, it appears, was their chance to shine. Sam Altman, Vinod Khosla, and other top VCs say they'll personally loan cash to startups as a short-term shoring-up measure to cover payroll and other expenses as the whole situation shakes out. In other parts of the value chain, the ecosystem is showing up, too. Deel, for example, is making over $120 million available to support its customers, and Brex's CEO leapt into action, trying to raise over $1 billion to cover bridge loans to keep startups running.
Adopting is what we do: The startup ecosystem may rely on the banks, but it was also nimble on its feet in reacting to the crisis. Etsy began processing seller payments via alternative partners, while some major players in the ecosystem, such as Life360, Sezzle, Unity and AppLovin, disclosed its exposure to SVB in new statements. Roku, Roblox and others disclosed their own exposure.
A fire sale: It seems like the burning wreckage of the bank is being parceled off, with SVB Financial reportedly looking for a buyer for SVB Securities and its SVB Capital VC division, and an FDIC auction for SVB assets is said to be underway.
International ramifications: It wasn't just in Silicon Valley that echoes were heard. The whole debacle is causing panic in China's startup industry, and in a historic last-minute deal, HSBC bank acquires Silicon Valley Bank UK, assuring customers that all depositors' money is safe. The response from the U.K. tech ecosystem illustrates just how jarring the bank’s failure is, reaching overseas. International regulators froze SVB assets in international branches in Canada and Germany, and the fallout is impacting many Indian startups.
SVB flames out, BTC fired up: We cringed pretty hard at the hot takes that “if everything was on crypto this coulda been avoided,” but crypto doesn't give two craps about our cringing, and leapt 18% in the wake of the SVB crisis, Jacquelyn reported.
Coulda been avoided: Investor Mark Suster says a "handful" of bad actors in VC destroyed Silicon Valley Bank.

The SVB collapse was also covered with additional context and analysis in our other newsletters. For example, check out this week’s fintech newsletter The Interchange.

Startups and VC

In non-banking-collapse news:

A diamond of fresh air: Aether wants to shift you from blood diamonds to gems pulled from thin air, Haje writes.
Building blocks: Christine writes that 123 Baby Box delivers for parents seeking children's products without the hassle.
Listening on Main Street: TuneIn rolls out its immersive map experience for mobile listeners, Lauren writes.
Times are a'changin: Tage reports that Naspers shuts down Foundry, its $100 million fund focused on South African startups.
Let's take this behind closed doors: Qualtrics accepts $12.5 billion all-cash acquisition offer to go private, Paul reports.

Building a PLG motion on top of usage-based pricing

Last July, Puneet Gupta, a former AWS general manager who’s now CEO and co-founder of Amberflo.io, wrote a TC+ article that explained how SaaS startups can adopt a usage-based business model.

In a follow-up published today, he shares four tactics teams can use to gather, analyze and leverage customer data to take the guesswork out of pricing decisions.

“When the time comes to make decisions about product packaging and pricing, the first place you turn to should be the metering pipeline for historical usage data,” he writes.

Three more from the TC+ team:

A bit of a trip-up: Synthesis Institute collapse is a major setback for US psychedelic therapy, by Haje.
Plotting a course: As the SVB dust begins to settle, what's ahead for startups, VCs and the banking industry? wonders Alex.
Big Gen: Ron is curious if generative AI really is ready for enterprise adoption.

TechCrunch+ is our membership program that helps founders and startup teams get ahead of the pack. You can sign up here. Use code "DC" for a 15% discount on an annual subscription!

Building a PLG motion on top of usage-based pricing image

Image Credits: miguelangelortega / Getty Images

Big Tech Inc.

Block monitoring firm PeckShield sent an ominous tweet directed at the crypto lending platform Euler Finance, simply saying: "Hi, you may want to take a look," Lorenzo reports. A series of transactions indicated there was an ongoing hack against Euler.

Another few to keep you busy: