The recent collapse of Silicon Valley Bank (SVB) created major buzz and worry in the eyes of many entrepreneurs. It was one of the largest bank failures since the Great Recession, and Silicon Valley Bank was the bank of choice for many venture capitalists and startups.
The bank, which had significant relationships with venture-backed companies and had a strong reputation for working with businesses that were female- and BIPOC-owned, has greatly impacted minority entrepreneurs across the nation, including Arizona. The ripple effect of the bank closure has impacted minority entrepreneurs by creating:
Less access to capital — Minority entrepreneurs already struggle with raising enough capital for their latest business venture and with the recent Silicon Valley Bank collapse it’s about to get even harder. Minority entrepreneurs can combat this by prioritizing establishing relationships with local bankers and accounts with smaller, local banks or credit unions.
Fear — Entrepreneurs are already faced with many challenges, and now they are going to have to deal with fear amidst the chaos. Entrepreneurs can use chaos as an opportunity to double down with existing customers/innovation with existing products & services.
Management skills — Entrepreneurs are inherently natural self-starters and fairly independent but in order to be successful will need to learn how to manage others. They will have to double down on their management skills to create better team cohesion during turbulent times.
Cash flow — Treasury and cash flow are vital to startups. Entrepreneurs can mitigate the fears and impact of SVB by understanding their specific treasury and cash flow needs.
The closure will likely change how investors evaluate companies and where startups choose to deposit funds.
Justin Bayless is CEO of Ten Figures and president of The Journey Venture Studio.