A startup founder says he "really dodged the bullet" after forgetting to move $3.5 million—almost all of the firm's cash—into his company's Silicon Valley Bank (SVB) account just days before the bank went bust.
The Santa Clara-based bank, a major backer of technology companies and startups, was abruptly shut down on Friday morning.
Customers were frozen out of accounts on Friday and were left scrambling to figure out how to pay employees and keep their businesses running, sources doing business with the bank told The Standard.
Federal regulators took control of the bank early Friday morning, putting nearly $175 billion in customer deposits under the control of the Federal Deposit Insurance Corporation.
But Conner Reinhardt—perhaps the luckiest startup co-founder in the U.S.—fortunately forgot to move a massive cash injection from a recent fundraising round into the company's SVB account just days before the collapse.
Reinhardt and Jhillika Kumar are the co-founders of Mentra, a so-called "LinkedIn for the neurodiverse population."
'It Was Literally on My To-Do List'
Reinhardt said he was planning to move almost all the company's funds from fintech company Mercury into SVB because he had heard rumors of the potential insolvency of Mercury after the FTX fallout. "We thought they were a safer choice," he said.
Reinhardt had planned to transfer $3.5 million into SVB on Monday, but said a business trip to New York meant he had to put off making the transaction.
"It was literally on my to-do list," Reinhardt said. "If I hadn't gone to New York, we would have lost everything. I've gone from trusting the banking system to being totally paranoid. I'm thinking of parking everything in four or five different institutions."
Mentra co-founder Kumar told The Standard she was relieved by Reinhardt's oversight.
"I can't imagine if we had raised the money, moved it to SVB, and then lost it," Kumar said. "We just missed that. That's insane."
An email sent to SVB staff seen by The Standard told employees to stay home Friday, unless they were essential workers including branch staff.
Workers at the bank's Santa Clara headquarters were spotted ordering pizza while a crowd of journalists and what appeared to be customers gathered outside around lunchtime Friday.
This is the second biggest bank to fail in U.S. history, and the biggest bank failure since the 2008 financial crisis.