The downfall of Silicon Valley Bank has led to a flurry of companies and entrepreneurs moving their money to the more reputable banks: JPMorgan Chase, Bank of America, Citigroup, and Wells Fargo.

Ryan Gilbert, head of Launchpad Capital, shared that people are trying to determine which banking establishment is the most reliable. He pointed out that although you could think that you had chosen the most secure bank, it is not possible to predict when something unexpected may happen. Consequently, he transferred his account to Chase.

Brex has found success in its corporate credit cards, while Meow has seen success in allowing people to gain interest off of government bonds, as well as offering accounts with BNY Mellon Pershing. Brandon Arvanaghi, CEO of Meow, shared in a telephone interview that they have been inundated with inbounds and have been working around the clock. It's not just SVB startups or customers either, according to Arvanaghi.

Arvanaghi notes that people have begun to consider counterparty risk, which pertains to if someone fails to comply with an agreement. For instance, the FDIC is not required to fulfill loan contracts in the event of a bank collapse. SVB, however, has declared they will meet their debt commitments, which was not certain a week ago, and are even providing new loans.

Companies are diversifying their resources by keeping capital in multiple banks to protect against risk. Unfortunately, this is not the most advantageous option. Matt Cohen from Ripple Ventures in Toronto explains that banks tend to treat those who keep large sums in their accounts differently. Additionally, it is too complicated to divide payroll among many accounts.

It is hard to determine the long-term results of this situation. SVB is likely to be sold, completely or in part, though probably not to a large bank. Cohen expressed concern that regional banks will be hurt by this, and that when everything is over, the large banks will have even more power.

It is uncertain what the startup economy implies. Startups are distinct from other companies since they often consume capital - normally a massive sum is invested when the account is opened, and then the amount decreases. Meanwhile, established companies have more capital coming in. Additionally, SVB was more eager to cooperate with startups than most other banks. "We do not know how many of the large banks are interested in the business that startups are bringing to them," says Arjun Kapur, the co-founder of Forecast Labs.

Kapur anticipated that startups will be more wary and become more prudent. Startups have already been lessening costs in response to the unpredictable nature of the economy in the last year; it may be expected that companies will spend less on marketing and other areas until they have a better understanding of what will take place.

Tanner Hackett, the CEO of Counterpart Insurance, which offers insurance for small businesses, has warned that a possible outcome of SVB's downfall could be more layoffs. In order to become profitable, he believes that businesses will have to be more cautious with their money, especially if they have difficulty procuring new funding or debt.

The Federal Reserve has been taking drastic steps to address inflation, which has included a surge in interest rates. Nevertheless, the downfall of SVB, Silvergate, and Signature crypto banks could hinder the Fed's progress in further increasing rates, or at least, slow down the rate of increase.