The Domino Effect: Why Everyone Should Care About the Startup Ecosystem's Financial Struggles
As someone with ties to the startup community, the fallout from the demise of Silvergate, SVB (and it looks like a few others may soon follow) is troubling. But what about people not affiliated with the startup community - should they care?
If the advancement of new medicines, technologies, climate solutions, space exploration matter to you at all, then yes. Because startups are the engines of innovation here and across the globe. And startups require funding.
Large businesses are great for scaling, but innovation is primarily the domain of the scrappy startup. The typical startup Founder/CEO, and I’ve had the privilege to meet hundreds, embodies the quintessential rugged individualism Americans romanticize. He or she possesses an unfailing commitment to a great idea and sacrifices sleep, leisure time, personal health, and, often, relationships and life savings to present their idea to the masses – or practically die trying. It's very hard work. It's extremely high risk. It's not for everyone.
Funding is essential to their businesses, and, at times, even more so than customers.
I wonder what will happen to these pioneers. I also wonder if innovation will be suppressed. Will that new medical device that could save thousands of lives now not be launched? Will a surprising technology that could greatly reduce carbon emissions be scrapped?
Investment flows into startups are predicted to trickle for a while (the jump in interest rates had been impacting investments for several months already). How long is anyone’s guess, but investors, private and institutional, are expected to be “skittish” for a time. It's understandable. At the same time, it appears some of the banks' problems were the result of flawed strategies and avoidable.
I’m hoping the fallout is minimal and brief, for my Founder friends and the rest of us who depend on their innovation coming to market.