Brett Adcock is the founder of the AI robotics company Figure, which is building a general-purpose humanoid robot. Previously, he founded Archer Aviation, an urban air mobility company that went public at $2.7B, and Vetri, a machine learning-based talent marketplace that was acquired for $110M.
Yesterday, America experienced its second largest bank failure in history. In the world of technology, Silicon Valley Bank (SVB) was one of the largest banks supporting small businesses, but today, tens of thousands of depositors are unable to access capital.
This is not the first time I have seen a shortage of funds. I’ve been building technology businesses for over 20 years: 15 years in software/Internet and five years in advanced hardware. Previously, I founded Archer Aviation, which went public in 2021 for $2.7 billion. Prior to this, I founded Vetri, which was acquired for $110M.
While I hope for the best, it’s important for founders and CEOs to plan for the worst. This will be the weekend that separates a good entrepreneur from a bad one.
In 2020, I was raising my Series A for Archer when COVID-19 hit and the venture funding environment came to a complete halt. Every single meeting I had was canceled within 48 hours.
While I hope for the best for companies banking with SVB, it is important for founders and CEOs to plan for the worst. This will be the weekend that separates a good entrepreneur from a bad one.
Here’s a 10-step guide for founders and CEOs that can increase your company’s chances of success:
1. Go to the office
This weekend, you’re in the war room. Spend time creating a thoughtful plan based on multiple scenarios. It’s best to prepare for the worst, stay calm, and execute with precision.
The goal of this session is to thoughtfully document a plan that will expand cash runway, establish talking points for employee communication, and identify any levers you can pull immediately to conserve cash.
2. Build an internal three-person Tiger team
This team should include the CEO, financial leadership, and people who lead the overall product and people operations. Smaller teams make it easier to communicate and move faster, but a mentor who has experience navigating these types of business cycles can also be helpful.
The team aims to raise cash balances for at least 30 days with the expectation that uninsured depositors will see higher recovery rates sooner. The longer your runway, the higher your chances of success.
3. Start Communicating With Investors Now
If you need capital beyond Federal Deposit Insurance Corporation (FDIC) insurance, approach existing investors and be transparent about your SVB exposure. Be direct: Ask if they would be in a position to wire cash to meet your capital needs, even if it means without conditions.
I’ll start making a list of every non-existing investor in my network and be ready to contact them on Monday morning. Work to keep track of all of this so you can stay organized in case deposit settlement takes weeks.
You will find that good investors will come forward to help because they understand that this situation will not last forever. Your request is to ask them to lend new money or buy the deposit claims outright. If things go south, you don’t want to be one of the 40,000 companies calling investors on Monday.