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Madrona Venture Group investor on helping founders navigate the Silicon Valley Bank crisis

Hope Cochran. (LinkedIn Photo)

Hope Cochran began her career as a senior auditor at Deloitte before serving as CFO of Clearwire and King Digital. She’s a finance expert.

But the tech veteran has never seen anything like the Silicon Valley Bank fiasco that rocked the startup world over the past week.

“I would not have anticipated this,” said Cochran, now a managing director at Madrona Venture Group.

We caught up with Cochran on Monday to learn how the Seattle venture capital firm navigated the sudden collapse of Silicon Valley Bank. Startup leaders spent the past several days scrambling for solutions after an extraordinary bank run, sparked by loss of confidence in Silicon Valley Bank’s financial position, made it insolvent late last week.

“Rollercoaster is the easy word to use,” Cochran said.

Many venture capital firms, including Madrona, faced two challenges as Silicon Valley Bank collapsed. Not only were portfolio companies struggling to access their cash, but the firms themselves also used the bank.

“We had to work through how to access cash ourselves,” Cochran said.

The firm told its portfolio companies that it did not plan on trying to move any of its own money out of Silicon Valley Bank.

That stance differed from other major firms including Founders Fund and Coatue Management, which advised companies to pull out cash — and were criticized by some people for helping cause SVB’s collapse.

Cochran said Madrona was ready to help companies with liquidity for payroll and other bills. She said a “large majority” of its portfolio had a relationship with SVB, a popular banking partner among tech startups and investors.

“We prepared a huge spreadsheet for everyone’s needs and how they were being covered,” she said.

The industry breathed a sigh of relief Sunday when U.S. regulators vowed to fully protect insured and uninsured SVB deposits. The Washington Technology Industry Association reported Monday that startups were able to access their funds to make payroll.

Going forward, Cochran said early-stage startup founders will be paying closer attention to their treasury system, particularly with increased diversification and safeguards.

There are outstanding questions yet to be answered in the fallout of SVB’s demise, including the level of trust in banking systems, the potential for more regulatory oversight, and if other banks will cater to tech startups in the way that SVB did.

But for Madrona, it’s largely business as usual.

“This was a moment in time that froze funds,” Cochran said. “It certainly doesn’t change our strategic direction for what we’re here to do.”

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