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“Nepotistic trust fund baby” I am not. My family has no money, no connections. I went to Portland State University. I had no VC connections whatsoever.
Our company was originally bootstrapped off of personal savings accumulated by working and living way below our means. No friends or family invested or gave us loans. I’ve had no inheritance and expect none.
We did not see a deposit account as a risky investment in any way.
Consider companies small enough to have no one whose job it is to do finance. As a founder you’re already working long hours and bank failure is not a risk that is top of mind compared to lack of product market fit.
As a founder, I am sorry that VCs apparently don't help with treasury management. That strikes me as something that should be a clear part of their value prop.
Most banks don’t really like working with startups and sometimes freeze their money over AML controls that don’t play nicely with investor checks. If there’s a way to purchase insurance against this risk, I’ve never heard of it, and it’s probably too expensive for early stage startups.
But it’s not unprecedented for the VC community to confuse capital issues and human rights issues: https://www.npr.org/sections/alltechconsidered/2014/01/26/26...