It is reported that some start-ups are temporarily putting their cash in Silicon Valley banks into US treasury bond bonds

It is reported that due to concerns about the financial stability of Silicon Valley Bank (SVB), some start-up companies are converting the cash deposited in the bank into US Treasuries, bonds and money market funds. According to insiders, several venture capital funds suggested that the companies they invested in would temporarily put their deposits in SVB into US treasury bond bonds, waiting for the storm to pass. They said that some companies were trying to use the bank’s website for operation. Silicon Valley Bank has a product called SVB Cash Sweep on its website, which allows customers to transfer idle funds into money market funds that have been “carefully studied” by the bank.

Interpretation of this information:

The recent concerns regarding the financial stability of Silicon Valley Bank (SVB) are leading some start-up companies to convert their deposits into safer options like US Treasuries, bonds, and money market funds. Sources have revealed that venture capital funds are advising portfolio companies to move their idle cash from SVB into treasury bonds to weather the storm. Several companies are also utilizing the SVB Cash Sweep product, which transfers idle funds into carefully studied money market funds.

The reason behind these events is the concern about the financial stability of SVB. SVB is a bank that provides banking services, including loans and investment advice, to start-ups and emerging technology companies. Start-ups have been hit hard by the pandemic, and many rely on loans and investments to continue their operations. However, with the increasing uncertainty about SVB, start-ups are opting for safer investment options that provide more stability.

One of the ways companies are moving their idle funds from SVB is through the SVB Cash Sweep product. SVB Cash Sweep allows companies to move their idle cash to carefully studied money market funds. This option is attractive to companies, as money market funds are considered to be low-risk, short-term investment options. Hence, start-ups can ensure that their cash is invested in low-risk, low-volatility investments, while still being available when needed.

Overall, the current events involving SVB suggest that start-ups are becoming more cautious with their investments, given the concerns about the bank’s financial stability. As a result, companies are seeking safer options and utilizing tools such as SVB Cash Sweep to preserve their cash.