Impacts of another bank implosion

First Republic Bank (FRB) implosion felt very different from Silicon Valley Bank’s (SVB). This time we were in the middle of the crisis because FRB was our bank. The news about FRB quarterly earnings on Wednesday and plummeting stocks worried us. We were running payroll on Wednesday. Our first question was, “Were the funds going to be available for payroll?"

After SVB failure, one may think, "It was coming. We should have changed our bank." We did think about it. However, changing banks is not easy. There are a lot of routine business transactions that occur in a business bank account. All of the routinely scheduled payments, like payroll and rent, and deposits from accounts receivable need to be updated with the new account information. It is a big hassle. It can't be done in an hour. Still, we set up a backup account at a local bank at the suggestion of one of our investors, just in case.

We decided to monitor the situation, be hopeful, and talk to our mentors if we needed to change the banks. On Thursday morning, we checked the news. FRB was still alive. The payroll company withdrew the funds. Big relief! Payroll was going through.

Furthermore, we had our Thursday meeting with Activate-Berkeley fellows, where we get to meet fellow startup founders and discuss our common problems and solutions. We talked about whether we should move our funds to our new bank. We also had a small investment that was going to be wired on Thursday. We considered whether we should redirect the investment to our new bank account. Again after discussions with fellow entrepreneurs and mentors, we decided to wait and see and hope that FRB pulled through. Friday morning, we checked the news at around 7 AM. FRB was still alive. So we went on business as usual and hoped that FRB would survive.

At noon, Karl spotted an article on CNBC that FRB would likely go into FDIC receivership. There was only one thing left to do. Close the account and move the funds to Pheronym's new business account. We barely made the wire request (12:59 PM) before the cut-off time of one o'clock. We had a very stressful 3 ½ h before hearing that the wire went through. Around 4:30 PM, after several phone calls, we got confirmation that the funds were wired to Pheronym's new bank account.