According to Brookings, “Annually, venture investment makes up only 0.2% of GDP, but delivers an astonishing 21% of U.S. GDP in the form of VC-backed business revenues.”
https://www.brookings.edu/research/as-the-venture-capital-ga...
Your suggestion is equivalent to saying that if I were to support hundreds of kickstarters for various board games and resell them for a profit to collectors over the years and then kickstarter imploded after taking on extreme financial risks, then I should bail out all the new customers of kickstarter who paid and didn’t get their games. It makes no sense. The people running kickstarter should take the hit, not some random other party working in their ecosystem.
SVB owners should get wiped out, not the people or companies who opened bank accounts.
But, much of the profits they made, and losses they are now incurring are both a consequence of the zero interest rate environment and it's current unwinding.
If the goverment bails out YC's companies, when they are successful later, who is going to benefit the most from that?
There are thousands of businesses using SVB. If they only know they have 250k coming in the near future, and can’t be sure they’ll make payroll, what do you think happens to all of their employees? Or the other businesses relying on their products? Or anyone they owe?
This is the second largest bank failure in US history, and for now it’s confined to a single bank and the cost to stop the fallout is relatively low.
If decisive action is not taken by the end of this weekend, it’s going to get much, much worse.
But what you're saying is the same thing: that taxpayers (random third parties who weren't even working in their ecosystem) should take the hit instead.
Spending taxes on preventing financial meltdowns from cascading actually makes the government and its citizens wealthier than not doing so.
What was your cash management strategy with your startup (assuming you have relevant experience)?
SV-style tech startups distribute more equity to employees than any other sector of business I know of and the average VC’s returns are worse than private equity, worse than the stock market and worse than real estate. You only hear about the biggest winners, but venture capitalists are taking on very long odds and the vast majority lose. More importantly, we all benefit from the advances the industry leads to—such as this wonderful phone I’m typing this comment into that can access and search nearly any encyclopedia, map or song in the world in seconds, from almost anywhere.
You might as well say Hasbro distributes more money than most companies because of all of the Monopoly games they sell.
If VCs make no return on their investment then they have just dumped millions of dollars into the pockets of startup employees and vendors.
I can trade my RSUs for real cash every six months after they are deposited in my account. I know the potential value of my next RSU grant every 15 minutes as it is updated on my Google Sheets.
The VCs make a return by diversifying their bets. But as an employee for a startup, you are not well diversified.
On a related note, Warren Buffett made a bet with hedge funds that he could have better returns just by investing money in an index fund over 10 years - he won
Cell phones were not created by tech startups.