Silicon Valley fears the worse with SVB shutdown


The FDIC has said that customers will have access to their insured deposits on Monday and will pay uninsured depositors an “advance dividend” within the next week. However, it remains unclear what that will amount to and when it will arrive.

The concern is that if the advance dividend is too small, there will be a contagion effect, causing widespread problems for many startups and their employees.

 Former Treasury Secretary Larry Summers has warned that there are dozens, if not hundreds, of startups planning to use that cash to meet their payroll next week, and if that is not possible, the consequences will be severe for the innovation system.

The call for the Federal Reserve to step in and protect these businesses is growing louder. The hope is that swift action can be taken to prevent the worst-case scenario from becoming a reality. And a myriad of startups can access their funds to pay their employees so they can continue their innovative work.