Where was the “courage” to quote this article while it was happening? This was exactly what I was saying but it was drowned it by people saying it was for the “little guys” which was lies.
> When federal regulators stepped in to backstop all of Silicon Valley Bank’s deposits, they saved thousands of small tech startups and prevented what could have been a catastrophic blow to a sector that relied heavily on the lender.
Both can be true. Thousands of the "little guys" were saved. Some big names benefitted too. And?
Look, they could have looked up the architectural plans and realized the building was skirting the edge of code. Chose a different building. Someone of them should have known better. Had the resources to do all of that.
But the building had nice amenities at an attractive price. I mean, they should have been sophisticated enough to know that this kind of deal is too good to be true. Rents are high for a reason you know! Why is it up to the public to rescue them?
Let us presume they don't suffer sunk cost fallacy. You have a great company, worth investing $10 million. The company loses $5 million of your cash before they had a chance to spend it. That loss obviously has nothing to do with the company's prospects. What do you do? Obviously, pony up another $5 million and get it going again. And tell them to put their cash in a real bank this time."
https://johnhcochrane.blogspot.com/2023/03/silicon-valley-ba...
They're not in the same position they were before. If you're worth 10 million when you have five million in the bank, you are now worth 5 million without it.
If you sold half your company to get the first 5 million, why would keep working if you have to sell the other half?
So if they had $5M uninsured in SVB they would have received $4.25M and suffered only a 750k loss.