Gener8tor co-founder Troy Vosseller is accustomed to a certain amount of risk — his Wisconsin-based startup accelerator and venture capital firm, which has programs in the Twin Cities, has invested in more than 300 startups, employs more than 100 people nationwide and hosts conferences for thousands of attendees.
But when gener8tor opened a bank account with Silicon Valley Bank (SVB), which was the 16th-largest FDIC-insured bank in the U.S. before its swift shutdown Friday, Vosseller thought it was among the firm's least-risky moves.
"That was turned on its head this weekend," Vosseller said.
Gener8tor, also run by co-founder Joe Kirgues, was among the Wisconsin companies impacted by SVB's rapid collapse. The firm is a well-known fixture in Wisconsin's startup scene, having worked with more than 1,000 startups around the country and even the world throughout its decade-long history. That includes having several Minnesota-based accelerator programs, including two with the University of St. Thomas, another for med- and health-tech companies called gBETA Medtech, as well as a couple of OnRamp accelerators for the education, workforce and insurance fields.
SVB customers including gener8tor were able to access their money Monday, but the fiasco has left companies trying to catch their breath in the aftermath. For gener8tor, that means opening accounts at multiple new banks, supporting its portfolio companies that were affected and mentally recovering after a stressful few days.
The drama started Thursday as shares of SVB's parent company plunged after the institution said it would raise around $2 billion to shore up its balance sheet. With rumors swirling, companies including gener8tor attempted to pull their money out. Gener8tor got some, but not all, of its cash out that day as SVB was "inundated" with requests, Vosseller said.
After federal regulators seized control of SVB Friday and attempted to find a buyer over the weekend, accounts at the tech-focused bank were frozen.
"We couldn’t even access the account over the weekend," Vosseller said.
Like many other SVB customers wondering how they would make payroll, gener8tor communicated with its team about what was going on and began working with its investors to come up with bridge financing to help it meet payroll, Vosseller said.
Gener8tor's investors include institutional investors, corporations, high-net-worth individuals and other venture funds. For instance, CSA Partners, a Milwaukee venture firm managed by Steve Mech and former Milwaukee County Executive Chris Abele, is an investor, as is Wisconsin Investment Partners and Venture Management LLC in Madison.
As the situation was unfolding over the weekend, Kirgues and Abele were at the South by Southwest (SXSW) conference Austin, Texas, as part of a Milwaukee delegation with Milwaukee Mayor Cavalier Johnson, who was pitching Milwaukee as an international hub for innovation. Being at the popular arts and tech gathering while also scrambling amid SVB's meltdown was a common experience for this year's SXSW attendees.
At the same time, gener8tor was in touch with "dozens" of its portfolio companies that were also exposed by the SVB crisis, Vosseller said.
"We were trying to share in real-time everything we were seeing and reading," he said.
Even after the relief of fully accessing its money on Monday, gener8tor is in the process of switching to new business bank accounts at multiple institutions to spread out its future risk. It's tapping Wisconsin commercial banks, larger regional and national banks, and credit unions in order to "be as diversified as possible," Vosseller said.
