American venture capitalist and entrepreneur Tim Draper has advised business founders to diversify their cash holdings in the wake of the collapse of Silicon Valley Bank (SVB). In a report directed at business founders, Draper suggests that Bitcoin and other cryptocurrencies can serve as a hedge against a “domino run” on banks and overbearing government intervention. He notes that businesses can no longer rely on a single bank or governing body to manage their cash, and that diversification is essential.
To that end, Draper recommends that business founders keep at least six months of short-term cash in two separate bank accounts: one with a local bank and another with an international bank. In addition, he advises keeping at least two payrolls worth of cash in Bitcoin and other cryptocurrencies. Draper believes that these preventative steps are necessary because, for the “first time in many years,” governments are seizing control of banks, and governments themselves are “at risk of becoming insolvent.”
Draper’s advice comes at a time when the collapse of SVB has caused significant uncertainty in the tech industry. SVB, which was once known for its support of startup companies, has recently faced a number of challenges, including a significant data breach and an investigation into its lending practices. This has left many startups scrambling to find alternative sources of funding and cash management solutions.
According to Draper, many startups have already sought emergency relief from him after SVB and other banks shut down. He believes that the collapse of SVB serves as a warning to businesses that they need to be prepared for any eventuality. By diversifying their cash holdings and embracing cryptocurrencies like Bitcoin, businesses can ensure that they are not overly reliant on any one institution or government.
Draper has long been an advocate for Bitcoin and cryptocurrencies, and his recent advice to business founders reflects his belief that these digital assets are the future of finance. He has previously predicted that the price of Bitcoin could reach $250,000 by 2023, and he has invested heavily in a number of Bitcoin-related startups.
Overall, Draper’s advice serves as a reminder to businesses that they need to be proactive in managing their cash holdings and prepared for any eventuality. By diversifying their cash holdings and embracing cryptocurrencies, businesses can protect themselves against the uncertainty and volatility of the current financial landscape.
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