- Startup founder Mitchella Gilbert lost nearly $300,000 in the Silicon Valley Bank collapse.
- Today’s uncertain banking market doesn’t bode well for founders of color, they said.
- Gilbert revealed how other founders of color can protect themselves in the uncertainties of banking.
Switch business bank account from Silicon Valley Bank to Chase Bank Mitchella “Mitch” Gilbert’s notebook had to-do list items before the fallout happened earlier this month.
Startup founders knew it was time to diversify their capital for financial security. But they were too late. When Gilbert arrived at SXSW on March 10th, they and their investors learned of the crash.
Gilbert told the insider, “It was actually a really great way to find out that you could lose over $300,000.
Gilbert, co-founder and CEO of Femtech, said: athletic apparel ohyaafter regaining access to funds on March 13, Federal Deposit Insurance Corporation It said it would protect depositors with SVB funds. They plan to transfer funds to Chase Bank and move half of it to First Women’s Bank.
but, The experience changed Gilbert’s way of thinking about business and financial planning, they said.
“We’re in an economy that’s already hurting founders of color,” Gilbert said, referring to the decline in venture capital investment in Black-owned companies. Add in the volatility of , and these numbers never get better.”
gilbert raised $1.3 million in pre-seed VCrevealed how other founders can protect themselves in banking uncertainty. This is a told story, based on an interview with Gilbert, edited for length and clarity.
Negative effects of SVB About the Originator of Color
I could have lost over $300,000. This cuts the runway from his 14 months to about 6 months and represents a major shift in strategy.
Salary was the biggest concern. Even investors were texting us to make sure they knew how important it was to get paid despite the news.
I gave up additional equity that weekend for bridge capital (a form of temporary funding that founders can use until permanent funding becomes available), which negatively impacted my balance sheet. I know several founders of They were trying to do the right thing to pay their employees, but it was disheartening to see venture capitalists essentially behaving like sharks and taking advantage of their needs.
Many of the women affected by SVB, especially those of Brown descent, have noticed how quickly the government has responded. It was this crazy feeling, “I think we’ll get our money back because our government won’t let rich white men fail.”
Still, an uncertain banking market doesn’t bode well for the future of investing in diverse founders.
Founders need to find opportunities that work for them
It’s important for founders to find opportunities that protect them along the way.
There is so much fear, sorrow and frustration right now. However, I advise entrepreneurs to seek non-dilutive capital (financing that does not require the recipient to give up shares in the company). It is also recommended to take low or no interest loans. These alternative ways of generating money are especially important after the SVB collapse. Speculation about other banks spreads.
We are excited about our new bank, First Women’s Bank, which will open in 2021. Founded by women to help cash-strapped entrepreneurs. When SVB closed, investors drove me to her FWB because the bank opened a ton of accounts for other female founders and founders of color.
What that really means is that our community has become very close-knit. So we have to come together and find a way to take care of ourselves.