March 10th, 8:14a Parabol CEO Reacting to Developing SVB Crisis (Internal Communication)

Good morning from San Francisco, everybody. A couple of you had written me dms this morning asking if the Silicon Valley bank situation affects us, and I wanted to send a general update to everybody.

The short answer is yes, it absolutely does. If you haven't heard what's going on, S V B under forecast, the drop in startup cash deposits to an astronomical amount there's some speculation that the Great Startup Extinction event of 2023 has begun.

As such, their leverage ratios got outta whack and then they had to sell almost 2 billion of assets securities that were, they were planning on holding long in a fire sale yesterday in order to raise cash for the bank.

And that cash will not be enough to cover forward projected cash deposit reduction. And so in order to keep the bank solvent, they need external capital to shore them up.

This situation affects us because if the bank did not have support and it were to go insolvent or wind down, they would take our cash with it.

And let me tell you, SVB going outta business was not on my bingo sheet for 2023. So we had to come up with a mitigation plan last night and and this morning, and we're in the middle of, of executing it, it was really handy that I was here at the SV Angel Conference.

I was able to take input from some very senior investors in the room, a bunch of senior CEOs. I was also communicating with our, our board and advisors prior investors and just integrating that knowledge to try and, and make a proposal for how to proceed.

And what we did is a couple of things. So our accounting team suggested that we open up a cash sweep account within SVB that is backed by a external bank because those assets would then belong to an external bank.

So we took that as step one. It's very easy that allows us to stay within the SVB bank which is beneficial to us because that allows us to continue to draw on our venture debt loan.

And we decided to call the full loan while we still can. And fingers crossed, we will get confirmation of that execution shortly and then just move all of those assets into an account that's gonna be backed by BlackRock.

We also are in the process of opening up a second account with an external traditional Bank where if we don't trust the way that the wind is blowing and we don't think that that first mitigation strategy will be enough, then we can react and move our assets elsewhere.

Anyway if you haven't read the news, it's interesting to see it is extra. Absolutely. But you know what, when am I now four, I'll be 43 in a few weeks after 20 some years in San Francisco.

I've learned that bubbles are just the way this place works. <laugh> anyway thank you to Kendra and everybody else that's been working hard to mitigate this particular issue.

I'm hoping that it won't affect us and that we'll be able to just continue on as we've been continuing on.

And rest assured, rest assured, I will continue to communicate with us as I learn more. Take care everybody. Have a great day.

Bye.