The Near Miss Apocalypse: Predictions for Post SVB Collapse

Spencer Rascoff

Spencer Rascoff serves as executive chairman of dot.LA. He is an entrepreneur and company leader who co-founded Zillow, Hotwire, dot.LA, Pacaso and Supernova, and who served as Zillow's CEO for a decade. During Spencer's time as CEO, Zillow won dozens of "best places to work" awards as it grew to over 4,500 employees, $3 billion in revenue, and $10 billion in market capitalization. Prior to Zillow, Spencer co-founded and was VP Corporate Development of Hotwire, which was sold to Expedia for $685 million in 2003. Through his startup studio and venture capital firm, 75 & Sunny, Spencer is an active angel investor in over 100 companies and is incubating several more.

The Near Miss Apocalypse: Predictions for Post SVB Collapse
Evan Xie

The historic Silicon Valley Bank collapse dominated headlines recently, and the tech and financial communities have only just started processing the aftermath. The 48-hour breakdown was both historic and a few inches away from economically catastrophic, and thanks to the swift moves of the FDIC, complete disaster was avoided.

But it’s still been disruptive. SVB was the banking partner for nearly half of U.S. venture-backed technology and healthcare companies that listed on stock markets in 2022, making it one of the biggest lenders for early-stage startups. The aftershocks of SVB’s breakdown spread just as far and fast as the main event: the close of Signature Bank just two days later, major market volatility, other banking crises at Credit Suisse, tech industry troubles, and much more.

In the days since, things have settled slightly, and the world’s fingers are crossed that depositors are comforted enough and confident enough to avoid another bank run. It’s good news, but we aren’t out of the woods yet. Now that we know the second-largest bank failure in U.S. history could be looming around any corner, how does that change the ways startups do business?

Level, Set, Go

Before we get into what could happen, it’s smart to level-set about how we got here. (And for an introductory primer, this short podcast can help.)

  • The government 100% did the right thing by assuring depositors that they will be made whole. The FDIC swooped in, steadied the ship, and made sure people had the money they needed when they needed it.
  • Some have called this a ‘bailout', but it’s not for two reasons. 1) SVB shareholders and creditors will be wiped out and 2) taxpayer money is not being used to do any bailing.
  • Remember: depositors are not creditors. When companies and people put money into their accounts at SVB, they had every reason to expect that it would be there when they needed to withdraw it. They weren’t loaning the money to SVB (as a creditor would), they were depositing money into their own account at SVB for safekeeping.
  • People who say “depositors took a risk by having more than the FDIC insured $250K limit” are, ahem, a bit misguided. (I’m being polite). The truth is that $250K is not that much money for a company, especially of the size and scale of some of SVB's major customers.

Here’s where I think we should go from here.

The Short Term

While SVB’s failure didn’t launch us over the precipice, many people are rightfully feeling very nervous being this close to the edge.

Looking out to the next few weeks, I predict we’ll see venture funding slow way down. It’s been chilly out there recently, but it’s going to be ice cold, piggybacking on the already struggling tech landscape. Writing new checks will take a backseat to checking in on existing investments. VCs will need to assess where their cash is and where their portfolio companies stand, and likewise startups are going to have to start thinking hard about what it means to be lean and extend runway. Hopefully this only lasts a few weeks and the wheels of the machine start turning again before summer.

If there is a positive take on the SVB wreckage, it’s that the Fed will likely slow down the rate of increases. I’d predict a 25, maybe even 0, basis-point increase next week, and I wouldn’t be surprised if there was a rate cut later this year.

Whither venture debt?

Prior to SVB’s failure, it was very common for a startup to have enough cash at SVB for one year of runway, plus a venture debt line for an additional another year. SVB profited from this by charging interest plus warrants and requiring banking exclusivity. It was part and parcel of how they did business, and since they’ve transitioned from success story to cautionary tale, expect to see new regulations prohibiting banks from requiring customer exclusivity in exchange for additional services.

In the immediate term, companies who had venture debt lines with SVB are trying to decide whether to put their cash back in SVB in order to access that venture debt. The whole situation is surreal, since just a few days ago these same companies were scrambling to pull their money out of SVB, and now they are considering returning. There are conflicting reports, but it appears that SVB is allowing these companies to keep a second banking relationship with another bank (so no more exclusivity), but at least half of their cash must be with SVB.

For startups choosing not to access that venture debt line, now trying to figure out how to operate without venture debt (aka less hiring, less spending, less growth), they’re in for challenging times ahead. To fill that funding gap, maybe we’ll see more private lenders step in and provide venture debt as a product. If that is the case, I suspect terms will be tougher and many VCs will recommend against it for their companies.

Another prediction: audit committees of boards will come into play much earlier than they often do now. Given the ever larger seed and Series A/B rounds, it wasn’t uncommon to see startups that had raised $100M+ and had 200+ employees before an audit committee was formed. I suspect these will now be formed upfront and have a much bigger role to play in early stages.

Silver Lining

The good news: the world isn’t ending and won’t in the near future (at least, not because of this). Yes, things will be different and it will take some time to settle into a post-SVB startup environment, but with change comes adaptation. And with adaptation comes innovation, which is what startups are all about.

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🚁 One Step Closer to Air Taxis in LA
Image Source: Joby Aviation

🔦 Spotlight

Joby Aviation, a pioneering electric air taxi company, has achieved a significant milestone by successfully flying a hydrogen-electric aircraft demonstrator for 523 miles with only water as a byproduct. This groundbreaking flight showcases the potential for emissions-free regional travel using vertical take-off and landing (eVTOL) aircraft, eliminating the need for traditional runways. The company's innovative approach combines its existing battery-electric air taxi technology with hydrogen fuel cells, paving the way for longer-range, environmentally friendly air travel.

For LA residents, this development holds exciting implications for future transportation options. Joby's technology could potentially enable direct flights from LA to destinations like San Francisco or San Diego without the need to visit conventional airports, offering a cleaner and more convenient alternative to current travel methods. The company's progress in both battery-electric and hydrogen-electric aircraft positions it at the forefront of next-generation aviation, promising to revolutionize urban and regional mobility.

Notably, Joby Aviation has already made strides in Southern California by securing an agreement with John Wayne Airport earlier this year to install the region's first electric air taxi charger. This strategic move sets the stage for LA to be among the initial markets where Joby will launch its electric air taxi service. With plans to commence commercial operations as early as 2025 using its battery-electric air taxi, LA residents may soon have access to a fast, quiet, and environmentally friendly mode of transportation that could significantly reduce travel times and traffic congestion in the region. In the not too distant future, LA might find itself in an identity crisis without traffic and excess smog 🤞🤞.


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Fuel Innovation: 7 Unforgettable Team Building Experiences in LA
Image Source: Discover LA

In today's competitive business landscape, team building activities have emerged as a crucial tool for fostering a positive work environment, enhancing productivity, and crucially, improving employee retention. Studies have shown that such activities help employees feel valued, with one report indicating that 93% of those who felt appreciated were more motivated at work. Importantly, team building events may improve retention rates, as employees who feel connected to their colleagues and company culture are more likely to stay long-term. With these benefits in mind, let's explore some of the most engaging and effective team building activities available in Los Angeles.

Pickleball

Image Source: Modern Luxury Angelino

Pickleball is a fantastic team bonding activity because of the easy-to-grasp rules and gentle pace make it perfect for everyone, regardless of age or fitness level. The game thrives on communication and teamwork, as players must collaborate and strategize to outplay their opponents, boosting team cohesion. Plus, the lively, fast-paced action sparks friendly competition and laughter, creating a fun and spirited atmosphere that brings everyone closer together. Los Angeles boasts numerous pickleball courts that are easy to rent if you have your own equipment. If you need additional assistance organizing your pickleball outing, there are plenty of full-service companies ready to handle every detail for you.

Resources: Pickle Pop, Corporate Pickle


Escape Room

Image Source: The Escape Game

Escape rooms are a great way to build camaraderie. They require participants to work together, combining their problem-solving skills and creativity to overcome challenges and puzzles. The immersive and time-sensitive nature of escape rooms fosters collaboration and communication. Additionally, the shared experience of tackling complex tasks and reaching a common goal helps build trust and foster positive emotions among colleagues.

Resources: The Escape Game, 60Out


Day Trip to Catalina Island

Image Source: Love Catalina

Catalina Island is a perfect day trip for a team because it provides a break from the usual work environment, allowing team members to relax and connect in a new setting. Shared experiences during the trip, such as exploring new places and participating in fun activities, help build stronger relationships and foster a sense of camaraderie. There are numerous team-building activities such as an arboreal obstacle course, an island tour, scavenger hunts and more.

Resources: Catalina Island Group Activities


Top Golf

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Topgolf is an excellent team building event because it provides an inclusive, relaxed atmosphere that accommodates players of all skill levels, fostering personal connections and improving team morale. The unique blend of competition and entertainment creates an ideal setting for building trust, enhancing communication, and revealing hidden skills among team members. Additionally, Topgolf offers structured team building packages with guided activities, discussion prompts, and lessons on culture, change, collaboration, and strategy, making it a versatile and effective platform for strengthening relationships and boosting overall team performance.

Resources: Topgolf El Segundo


SoFi Stadium Tour

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A SoFi Stadium tour offers a unique, behind-the-scenes experience of one of the world's most advanced sports venues, allowing team members to explore exclusive areas like premium suites, team locker rooms, and the player tunnel together. The tour provides a shared, memorable experience that can foster camaraderie and spark conversations among team members, regardless of their interest in sports. Additionally, the stadium's state-of-the-art features and impressive architecture can inspire creativity and innovation, while the group setting encourages interaction and collaboration, making it an engaging and enjoyable activity for teams of various sizes and backgrounds

Resources: SoFi Stadium Group Tours


Corporate Volunteering

Image Source: L.A. Works

Volunteer work serves as an excellent team building activity by uniting employees around a shared, meaningful cause, fostering a sense of purpose and collective accomplishment. It provides opportunities for team members to collaborate in new ways, often revealing hidden strengths and leadership qualities that may not be apparent in the regular work environment. Additionally, engaging in community service can boost morale, enhance the company's reputation, and instill a sense of pride among employees, leading to improved workplace relationships and increased job satisfaction.

Resources: Habitat for Humanity, L.A. Works, VolunteerMatch


Corporate Improv Sessions

Image Source: Improv for the People

A corporate improv class encourages spontaneity, creativity, and quick thinking, skills that are valuable in the workplace. It promotes active listening and collaboration, as participants must work together to create scenes and respond to unexpected situations, fostering better communication and trust among team members. Additionally, the playful and often humorous nature of improv helps break down barriers, reduces stress, and creates a shared positive experience that can improve team morale and cohesion long after the event.

Resources: Improv-LA, Groundlings, Improv for the People

🎬 Paramount and Skydance Are Back On
Image Source: Paramount

Happy Friday Los Angeles! Hope you all had a fantastic Fourth!!

🔦 Spotlight

Paramount and Skydance Media have rekindled talks to merge after negotiations abruptly halted in June. The proposed deal, contingent on approval from Paramount’s board, aims to combine Paramount’s extensive media holdings—including CBS, MTV, and Nickelodeon—with Skydance’s film expertise showcased in hits like "Top Gun: Maverick." This merger signals a potential transformation in the media landscape, positioning the new entity to compete more effectively amid challenges from streaming services and the decline of traditional cable TV.

Led by Shari Redstone, Paramount’s controlling shareholder via National Amusements, the deal represents a pivot towards revitalizing Paramount’s strategic direction amidst financial struggles and shareholder concerns. The involvement of major investors like RedBird Capital Partners and David Ellison underscores the financial backing aimed at stabilizing Paramount’s operations and addressing its $14 billion debt burden. Importantly, the agreement includes provisions to protect National Amusements from potential legal challenges, addressing previous hurdles that stalled earlier negotiations.

The deal also includes a 45-day period for Paramount to explore alternative offers, highlighting continued interest from other potential buyers like Barry Diller’s IAC and media executive Edgar Bronfman Jr. This flurry of activity underscores the significant stakeholders’ interest in Paramount’s future and its potential as a key player in a rapidly evolving media industry.


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  • Sidecar Health, a startup that offers personalized health insurance plans to businesses that allow members to see any doctor and pay directly at the time of service, raised a $165M Series D led by Koch Disruptive Technologies. - learn more

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