In bad times (like covid/recessions), SVB has extended lines of credit to many VC-backed startups.

It's been a mutually beneficial relationship for 40 years.

not ..completely. startups have a slightly different profile than normal businesses, and SVB is well-oiled machine for working with them. maybe its more charitable to say that they have specialized?

To me that just seems like another reason, if you're someone backing multiple startups exposed to the overall health of the ecosystem, to point people to different options so you don't have a single point of failure.

Surely there are enough banks and bankers around that you could have half a dozen or more specialists? It's knowledge work, not something needing billions in physical infrastructure investment.

The NY Fed looked at lending specialization actually improved Bank lending performance https://www.newyorkfed.org/medialibrary/media/research/staff...

This has to do with deposit specialization which I don’t know if it’s been studied, but you could see the same arguments applying to.

If you're an individual startup, you don't care about the overall system, just maximizing your own. So that efficiency seems great.

But if you're a VC with a broad portfolio, you're much more exposed to the single-point-of-failure risks that come with increased efficiency.

"Give up some efficiency for system robustness and long-term-health" is a no-brainer for mature engineering orgs, but in this financialized world nobody can see the longer term big picture

When there is a run on the bank selfishness becomes a virtue. Those that exercise restraint and take the high road of not contributing to the panic are often the ones who end up losing the most.