3 Rules for Startup Cash Management

Post-SVB/Signature collapse, startups are all rightly spooked about the safety of their cash in the bank. Here are 3 actionable cash management strategies to start now. (None of this is investment advice.)

1. Have more than one bank account. This has become the new industry standard for startups overnight. Set up one big 4 (JPM, BofA, Citi, WF) account and you can have your second operating account with a smaller bank that supports your industry focus or region. One growing opinion is to use the big banks as your backup account and keep your active operating account with the smaller bank .

2. Use an automated solution that spreads your cash across multiple bank accounts:

a. ICS or CDARS from IntraFi lets you spread your cash into deposit accounts or CDs with other banks using a sweep method. They automate the sweeping and provide you with one aggregated bank statement, so this solution is operationally manageable. You can check what banks are plugged in here.

b. Brex Business Account (fka Brex Cash) is a savings account that spreads your cash across up to 9 institutions, providing $2.25mm in FDIC coverage. Any funds past $2.25mm Brex will invest into money market funds that earn some yield.

3. Accept that cash in the bank is not risk free and choose to manage that risk directly via an investment program. A quick primer on how to invest corporate cash is here.