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A comment on VC firms are urging founders to pull money from troubled Silicon Valley Bank. Parent comment

Re:VC firms are urging founders to pull money from troubled ... by majormajor on Thursday March 09, 2023 @06:08PM (#35088148)
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.

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Re:VC firms are urging founders to pull money from troubled ... by kasey_junk on Thursday March 09, 2023 @06:30PM (#35088385)
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.

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Re:VC firms are urging founders to pull money from troubled ... by majormajor on Thursday March 09, 2023 @07:33PM (#35088925)
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

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