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I founded a startup. We raised $2.5M, not all at once. We banked at SVB. It sucked. Subpar online tools. $200/mo “analysis fee,” never once had a “relationship”

by a5seo 4y ago

I founded a startup. We raised $2.5M, not all at once. We banked at SVB. It sucked. Subpar online tools. $200/mo “analysis fee,” never once had a “relationship” with anyone. Maybe we were never big enough to be relevant. That’s fair. My advice: use a retail bank until you have a few million in revenue, then shop around. Make the SVB’s of the world earn your business. SVB in particular was so incredibly entitled. I’m glad they failed more spectacularly than my little startup.

commandersaki 4y ago
Even Bernie Madoff had $5B sitting in a Chase Bank account.
koolba 4y ago
We’re you forced to use them as a bank as part of the funding agreement? Otherwise why put up with that crap?
- dcow 4y ago
  AFAIU this only happened when taking out "loans" from SVB and it's not a general practice to add banking stipulations to terms sheets.
- gerad 4y ago
  When you start a startup, especially a venture-funded one, you really only want to be innovative in one area: your core offering. It doesn't make sense to spend an innovation token on your bank. So you go with something tried and true, that's done it a million times before with a million other startups. That was SVB. Going with something else has potential downsides that you may not even be aware of (as the OP describes).
  - sanderjd 4y ago
    Seems like this conventional wisdom about innovation tokens was actually very poor in this particular area. Makes me wonder what other bad decisions might be lurking behind that best practice.
    - paulgb 4y ago
      Although, things worked out in the end for depositors, likely in part because it was a high-profile, “safe bet” bank.
      - lazide 4y ago
        Honestly, this is generally the way the FDIC has done it. I don’t recall any uninsured depositors at Wamu getting screwed either in ‘08.
        RC_ITR 4y ago
        Because they got bought. Uninsured Indymac depositors got $0.50/dollar and usually, an uninsured depositor at a small bank can expect $0.60-0.75/dollar.
        lazide 4y ago
        Yes, and the FDIC brokers those sales rapidly and with vigor. If someone doesn’t want to buy a small regional, it’s because the FDIC didn’t care to make it happen. Which isn’t surprising if there is no systemic risk involved.
    - freddie_mercury 4y ago
      Was it very poor? Other than a weekend of stress, what was the actual downside to a founder of using SVB?
      - jjnoakes 4y ago
        Does the outcome justify the risk if the outcome could have gone radically differently? Is driving without a seatbelt not a poor decision if one walks away from the wreck?
        lazide 4y ago
        What seatbelt was someone not wearing in this case? The normal retail banks are TERRIBLE. I did my startup using a retail bank to start (BofA), and it was an absolute nightmare. I ended up at First Republic, and they’ve been great.
  - rblatz 4y ago
    Sounds more like you are describing Chase bank. It’s tried and true and millions of businesses from small mom and pops to fortune 10 companies use them. They’ve seen it all and could even be an underwriter for your IPO. They can take you from idea to exit.
  - deleted 4y ago
    [deleted]
kentonv 4y ago
Weird, that's not my experience. My startup, which raised $1.2M back in 2015, didn't have to pay any monthly fee -- at least until the balance dropped below some threshold in the 5-digit range at which point they started charging $15/mo, I think. After that startup failed SVB courted me for a personal account. They actually came to me in person, took me out for coffee and stuff. I didn't even have much money at the time but they just seemed really interested in signing up startup founders (even failed ones). For comparison I tried talking to Chase Private Client at their Palo Alto branch, since my old 401k had gotten big enough to qualify for their minimum if I rolled it over to them. The banker there practically sneered at me, acted exasperated like I was wasting his time and he had much bigger clients to tend to. Also gave me a spiel about their high-fees wealth management in which he asked leading questions about my investments and then tried to make me feel stupid about my answers so that I'd decide to pay Chase to manage it instead. This was all obviously a marketing shtick and I found it incredibly insulting. I went with SVB. Yes, SVB's web site was ugly. Weirdly they had totally different ugly web sites for their business and personal arms. It functioned fine, though.
- csomar 4y ago
  It's not relative to the bank but to the bank branch. I have an account with Chase and I made it clear that I'll be depositing $2K to keep the account on, and I would not be using it for day to day transactions. The branch manager was cool with that and we chatted for an hour or so about different stuff and he actually gave me some real advice. This is not about Chase, it's about the branch and the branch manager. I'm pretty sure another branch manager will be annoyed talking to a $2k client in deposits with no in/out flows and might not even consider them for an account. If you want to bank with a specific bank, shop for the branch.
  - deleted 4y ago
    [deleted]
  - kentonv 4y ago
    True, a few years later, I now live in Austin and the Chase people here are a whole lot nicer to me. Maybe there's just too many ultra-rich people in Palo Alto, heh.
ghiculescu 4y ago
We chose to not use SVB because their online banking was so bad. Dodged a bullet.
- vinay_ys 4y ago
  I find it weird/hilarious that the darling bank of tech startups in the heart of Silicon Valley has bad UX.
inconceivable 4y ago
here's an anecdote with zero drama: we started at $0 revenue and $2000 initial deposit at citibank. over the next few years we put $millions a year through them, carried a balance of $millions in combined checking and mmf, and sold our company for $millions. now my personal accounts at the bank are in $low-thousands, and my post-sale money is in investment banks. nobody from citi ever called, or cared, or said anything when i went to the branch other than one time a teller asking me what our business did because he thought we were a tech company and he really liked cloud computing stuff. i was happy to talk to him about it, and that was it. 99% of banking is boring and uneventful, it's just numbers on a screen, especially if you live in an area where big bank accounts are common (certain areas of big states like ca, tx, ny, etc.) anecdote on an anecodte: when we sold our biz, i tried to transfer ownership of the account to the new owner, and the branch manager couldn't actually make that happen. he said i needed to write a letter (a physical, printed and signed letter) to the headquarters of citi. l-o-l obviously we didn't do that, so we just shut it down and cashier check deposited the balance to the new owner's account at chase - and they happened to have a branch literally 2 blocks away. i just walked in and deposited the check into his account #. the teller seemed like she did this sort of thing on a regular basis.
- eastbound 4y ago
  > 99% of banking is boring and uneventful, it's just numbers on a screen I wish my bankers would shut up about building a relationship, and just process these numbers. They are the car dealerships of holding money, such employees should be working on instagram not in the real economy. Human in the loop costs huge amounts of money and they only interfere. Last time after a bank transfer that required log in, login confirmation by phone, bank transfer UI access by digit card security, bank transfer confirmation by SMS… …she just called to check it was me. For $650. I wish banks would just shut up and process our money.
  - specialdragon 4y ago
    $650 is a lot of money. Yes, definitely have those checks. I'd rather they call and check and everything is fine, than they not call, and things not be fine.
mise_en_place 4y ago
Brex is way better compared to SVB. SVB had these weird mountains of paperwork when I had to use them for my startup back in 2017. Brex onboarding was instantaneous for my small business.

by a5seo 4y ago

commandersaki 4y ago

Even Bernie Madoff had $5B sitting in a Chase Bank account.

koolba 4y ago

We’re you forced to use them as a bank as part of the funding agreement? Otherwise why put up with that crap?

dcow 4y ago
AFAIU this only happened when taking out "loans" from SVB and it's not a general practice to add banking stipulations to terms sheets.
gerad 4y ago
When you start a startup, especially a venture-funded one, you really only want to be innovative in one area: your core offering. It doesn't make sense to spend an innovation token on your bank. So you go with something tried and true, that's done it a million times before with a million other startups. That was SVB. Going with something else has potential downsides that you may not even be aware of (as the OP describes).
- sanderjd 4y ago
  Seems like this conventional wisdom about innovation tokens was actually very poor in this particular area. Makes me wonder what other bad decisions might be lurking behind that best practice.
  - paulgb 4y ago
    Although, things worked out in the end for depositors, likely in part because it was a high-profile, “safe bet” bank.
    - lazide 4y ago
      Honestly, this is generally the way the FDIC has done it. I don’t recall any uninsured depositors at Wamu getting screwed either in ‘08.
      - RC_ITR 4y ago
        Because they got bought. Uninsured Indymac depositors got $0.50/dollar and usually, an uninsured depositor at a small bank can expect $0.60-0.75/dollar.
        lazide 4y ago
        Yes, and the FDIC brokers those sales rapidly and with vigor. If someone doesn’t want to buy a small regional, it’s because the FDIC didn’t care to make it happen. Which isn’t surprising if there is no systemic risk involved.
  - freddie_mercury 4y ago
    Was it very poor? Other than a weekend of stress, what was the actual downside to a founder of using SVB?
    - jjnoakes 4y ago
      Does the outcome justify the risk if the outcome could have gone radically differently? Is driving without a seatbelt not a poor decision if one walks away from the wreck?
      - lazide 4y ago
        What seatbelt was someone not wearing in this case? The normal retail banks are TERRIBLE. I did my startup using a retail bank to start (BofA), and it was an absolute nightmare. I ended up at First Republic, and they’ve been great.
- rblatz 4y ago
  Sounds more like you are describing Chase bank. It’s tried and true and millions of businesses from small mom and pops to fortune 10 companies use them. They’ve seen it all and could even be an underwriter for your IPO. They can take you from idea to exit.
- deleted 4y ago
  [deleted]

kentonv 4y ago

Weird, that's not my experience. My startup, which raised $1.2M back in 2015, didn't have to pay any monthly fee -- at least until the balance dropped below some threshold in the 5-digit range at which point they started charging $15/mo, I think. After that startup failed SVB courted me for a personal account. They actually came to me in person, took me out for coffee and stuff. I didn't even have much money at the time but they just seemed really interested in signing up startup founders (even failed ones). For comparison I tried talking to Chase Private Client at their Palo Alto branch, since my old 401k had gotten big enough to qualify for their minimum if I rolled it over to them. The banker there practically sneered at me, acted exasperated like I was wasting his time and he had much bigger clients to tend to. Also gave me a spiel about their high-fees wealth management in which he asked leading questions about my investments and then tried to make me feel stupid about my answers so that I'd decide to pay Chase to manage it instead. This was all obviously a marketing shtick and I found it incredibly insulting. I went with SVB. Yes, SVB's web site was ugly. Weirdly they had totally different ugly web sites for their business and personal arms. It functioned fine, though.

csomar 4y ago
It's not relative to the bank but to the bank branch. I have an account with Chase and I made it clear that I'll be depositing $2K to keep the account on, and I would not be using it for day to day transactions. The branch manager was cool with that and we chatted for an hour or so about different stuff and he actually gave me some real advice. This is not about Chase, it's about the branch and the branch manager. I'm pretty sure another branch manager will be annoyed talking to a $2k client in deposits with no in/out flows and might not even consider them for an account. If you want to bank with a specific bank, shop for the branch.
- deleted 4y ago
  [deleted]
- kentonv 4y ago
  True, a few years later, I now live in Austin and the Chase people here are a whole lot nicer to me. Maybe there's just too many ultra-rich people in Palo Alto, heh.

ghiculescu 4y ago

We chose to not use SVB because their online banking was so bad. Dodged a bullet.

vinay_ys 4y ago
I find it weird/hilarious that the darling bank of tech startups in the heart of Silicon Valley has bad UX.

inconceivable 4y ago

here's an anecdote with zero drama: we started at $0 revenue and $2000 initial deposit at citibank. over the next few years we put $millions a year through them, carried a balance of $millions in combined checking and mmf, and sold our company for $millions. now my personal accounts at the bank are in $low-thousands, and my post-sale money is in investment banks. nobody from citi ever called, or cared, or said anything when i went to the branch other than one time a teller asking me what our business did because he thought we were a tech company and he really liked cloud computing stuff. i was happy to talk to him about it, and that was it. 99% of banking is boring and uneventful, it's just numbers on a screen, especially if you live in an area where big bank accounts are common (certain areas of big states like ca, tx, ny, etc.) anecdote on an anecodte: when we sold our biz, i tried to transfer ownership of the account to the new owner, and the branch manager couldn't actually make that happen. he said i needed to write a letter (a physical, printed and signed letter) to the headquarters of citi. l-o-l obviously we didn't do that, so we just shut it down and cashier check deposited the balance to the new owner's account at chase - and they happened to have a branch literally 2 blocks away. i just walked in and deposited the check into his account #. the teller seemed like she did this sort of thing on a regular basis.

eastbound 4y ago
> 99% of banking is boring and uneventful, it's just numbers on a screen I wish my bankers would shut up about building a relationship, and just process these numbers. They are the car dealerships of holding money, such employees should be working on instagram not in the real economy. Human in the loop costs huge amounts of money and they only interfere. Last time after a bank transfer that required log in, login confirmation by phone, bank transfer UI access by digit card security, bank transfer confirmation by SMS… …she just called to check it was me. For $650. I wish banks would just shut up and process our money.
- specialdragon 4y ago
  $650 is a lot of money. Yes, definitely have those checks. I'd rather they call and check and everything is fine, than they not call, and things not be fine.

mise_en_place 4y ago

Brex is way better compared to SVB. SVB had these weird mountains of paperwork when I had to use them for my startup back in 2017. Brex onboarding was instantaneous for my small business.