Finance tips for biotech start-ups with SVB situation
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Despite the good news, we decided to publish a startup advisory from CFO. Update: Regulators said depositors of bankrupt Silicon Valley Bank and Signature Bank (also recently filed for bankruptcy) would have full access to their funds starting Monday. This is guaranteed regardless of the outcome of the Silicon Valley Bank acquisition auction.
Make a financial plan, get your hands on cash:
- Build a 4-week rolling daily receipts and payments style cashflow forecast.
- Gear up the finance team to actualize & reforecast every AM by 10 am
- Schedule a Daily Cash Management Crisis call for 10 am every day. CEO to the Chairperson.
- Redirect any future cash receipts/revenue into non-SVB accounts. Don’t throw fresh money on the fire.
- If SVB is your only current bank, open accounts with 2 other AA or A-rated banks.
- Go supplier by supplier and grade them a, b, or c
a – showstoppers
b – pay if you can
c – don’t pay
You want as few a’s as possible, ideally none.
- Find out how to get your $250k FDIC cash.
- If you can pull any deposits or bonds back into a non-SVB account. Do it. Put your hands on any liquid you can.
- Consider factoring receivables.
- Consider asking customers to prepay for a discount.
- Put dates on crucial decision points.
Take some internal action:
- Communicate a salary deferral plan with your top team. CEO takes the most pain $ and %.
- Elevate sign-off of all new POs to the CEO and CFO jointly. Don’t sign any off.
- Make a list of ‘survival headcount.’ The bare minimum on which the business can operate. You may need this to prioritize payroll later.
- Feed all of the above back through your 4-week rolling Daily Cash forecast.
Build a simple “who, what, when, how much” list of actions and stick it on the wall.
Talk to stakeholders:
- Set out a memo with the situation to your investors and the measures you are taking. Promise them a daily update following your 10 am meeting.
- Follow up the memo with a 121 call to each investor. Ask them to club into an emergency bridge. Tough ask, but nothing to lose.
- Write out to your staff. Explain the situation. Be honest, but show them you have a plan and control the controllable.
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