> likely be made whole or close to whole

I've seen several versions of this sentiment here. What are people basing it on? I don't know much at all about the situation.

its HN fantasy-land talk

first HN said there was no problem

then HN said everyone will get their money back

what next?

HN is full of dreamers, the kind who wander into traffic

The parent didn't say everyone would get their money back. It said the friend who took a seed-stage investment will likely get most of their money back. I don't know the odds of that (most uncertain about the amount of money involved) but it's definitely much higher than "everyone gets all of their money back".

It's how the FDIC does things. They pay what are called "dividends" on your previous deposits from the successor bank as they sell off assets.

But if you're curious, and want a layman no-jargon version the press release from the FDIC is pretty good.

I mean this in no uncertain terms. HN users know nothing about this and are regurgitating pure rubbish over and over again in this thread. If you're concerned, don't even trust me, but go read the press release. CA put out one too.

https://www.fdic.gov/news/press-releases/2023/pr23016.html

> All insured depositors will have full access to their insured deposits no later than Monday morning, March 13, 2023. The FDIC will pay uninsured depositors an advance dividend within the next week. ...

Large burn? You mean any burn at all…

Money there to to be spent over the next six months is now not available.

Payroll in Silicon Valley is going to be a mess this week.

Companies that lend to startups short term are going to have a busy time.

For sure. The post I was replying to was for a seed stage company though. They’ve got $250k secured by Monday. My point was small firms can meet payroll and bills just fine with only $250k

Sure, pre-seed. Seed is usually $2m-5m these days, and received all at once (mostly) as compared to VCs which do capital calls.

A company with 26 people, each making $120k (pre-tax), or a company with 51 people, each making $60k/yr pre-tax is enough to miss payroll this week if there's only $250k to draw from, and that's not accounting for any other expenses (like, say an AWS/GCP bill, though hopefully you're net-60 with them). CEO/CFO's also now got two weeks to come up with another $250+k in a complex environment.

but do you automatically get access to the insured part, or do you have to sit around and wait for a few months until FDIC hashes it out with whoever? it could be really a matter of life and death for some startups.

For sure. The post I was replying to was for a seed stage company though. They’ve for $250k secured by Monday. My point was small firms can meet payroll and bills just fine with only $250k

Yep traditional advice is don't burn > 100k / mo when early stage, and most lower. So 2mo+ payroll fine for a normal seed, early A. Later stage are normally more sensitive. It's also a real issue with profitable companies whose outflows are at that level and are considering bigger purchases -- I'd be bailing if we were there just bc that.

Except the last couple years have been bonkers with little revenue / spending alignment during fundraising. Early stage burns are above that level, which makes the situation worse for current crop of co's. Ouch and good luck :(

The IOUs that FDIC hands out can be borrowed against, or sold. There will be a lot of people active this week trying to buy them at favorable rates