My startup banking story - https://news.ycombinator.com/item?id=35157959 - March 2023 (257 comments)
My California based credit union doesn't even offer business accounts. And using the co-op network to do in-branch business at other credit unions is not as easy as the marketing lead me to believe, so I had to get a local credit union account where I moved as well. My Washington credit union does do business accounts, so that's a nice option if I need one. Plus, it's fun being a member of two aerospace/defense employee credit unions when I only worked in tech :P
Let's say that a friend of mine has a startup funded account at Chase, and where should they go?
Silicon Valley Bank... oh wait. In all seriousness, the approachability and flexibility of SVB bankers was really unparalleled at the time. Not like Alex in this story, that made really half-baked attempts to engage with a client model he was entirely unfamiliar with (but got all the credit for). This being said, Silicon Valley Bank, a division of First Citizens Bank continues to exist.
I see a lot of Fintech players on the scene now. Brex, Mercury and Rho are common ones, through Brex has taken steps to distance itself from true, seed-stage startups as of late. Given what happened with Synapse's failure [1], I have doubts that they have the same protections and regulations of a brick and mortar FDIC bank.
Diversification is key too - so having multiple accounts. Some non-fintech banks I've seen floating around, ironically, JP Morgan Startup Banking, Wells Fargo Technology Banking Group, Citigroup Commercial Bank, PNC Technology Finance. All big banks, just not their retail banking divisions (as the author was experienced using).
[1] https://en.wikipedia.org/wiki/Synapse_Financial_Technologies
My company had an exit, I did well financially. This is not a secret. I'm extremely privileged and thankful for it. But as a result of this, I've used a private bank (or mix) for a number of years to store the vast majority of my financial assets (over 99.99% of all assets, I just did the math). An unfortunate property of private banks is they make it hard to do retail-like banking behaviors: depositing a quick check, pulling cash from an ATM, but ironically most importantly Zelle.
As such, I've kept my Chase personal accounts and use them as my retail bank: there are Chase branches everywhere, its easy to get to an ATM, and they give me easy access to Zelle! I didn't choose Chase specifically, I've just always used Chase for personal banking since I was in high school so I just kept using them for this.
Anyways, I tend to use my Chase account to pay a bunch of bills, just because it's more convenient (Zelle!). I have 3 active home construction projects, plus pay my CC, plus pretty much all other typical expenses (utilities, car payments, insurance, etc.). But I float the money in/out of the account as necessary to cover these. We do accounting of all these expenses at the private bank side, so its all tracked, but it settles within the last 24-48 hours via Chase.
Otherwise, I keep my Chase balance no more than a few thousand dollars.
This really wigs out automated systems at Chase. I get phone calls all the time (like, literally multiple times per week) saying "we noticed a large transfer into your account, we can help!" And I cheekily respond "refresh, it's back to zero!" And they're just confused. To be fair, I've explained the situation in detail to multiple people multiple times but it isn't clicking, so they keep calling me.
I now ignore the phone calls. Hope I don't regret that later lol.
Which one(s)?
In 2022 I lost my business banking and had to shut down a business that I owned for 20 years because it was related to the adult entertainment industry and, despite being completely legal and aboveboard, a single wire transfer that got a little bit of scrutiny resulted in them asking questions about what we did and, knowing that I was doing absolutely nothing wrong, I answered all of their questions truthfully and completely. A few months later I was told that we "fell outside of their risk appetite", our accounts were being closed... and for two months we searched for any bank or credit union in Canada but none would take us.
A lot of industry insiders had that exact reaction: "Are you stupid? Did you not know?! You NEVER admit that you're in this industry you moron!" etc. We even had a very sympathetic branch manager suggest that we re-incorporate, re-brand and hide what we do (a front, in other words). I couldn't do that. And I mean, we had no issues for 20 years. 10 of which were banking as a corporation (was personal accounts before that since we ran it as a proprietorship) and I thought that being in Canada we were pretty progressive. No one I told on a personal or professional level had ever cared. So why would the banks? We were lawful so why should they care?
What I think it was:
1: Chase's business account wasn't appropriate for a tech startup; nor was it appropriate for the amount of money Mitchell was handling.
2: When your bank calls you after a very, very large money transfer, you should take the call.
That being said: In today's world where every other phone call is some telemarketer trying to scam you or otherwise sell you something you don't want or need, I can sympathize with why Mitchell blew off the first call.
>1: Chase's business account wasn't appropriate for a tech startup; nor was it appropriate for the amount of money Mitchell was handling.
What properties make it inappropriate for a tech startup, specifically? What would be appropriate instead, and why?
>2: When your bank calls you after a very, very large money transfer, you should take the call.
He did take the call, but I take your answer to mean that Mitchell and Alex didn't have the right kind of conversation on the call. Is that correct? If so, what ought to occur on a call that follows a large transfer?
I would echo this question. If my bank called me and asked if I needed help, why would I say yes? I got money, the bank is holding it, everything is going great! This really feels like Alex was trying to ingratiate himself with a big client but communicated that really poorly, such that the message of "you are a big deal so I want to give you top tier service" never came across.
>Someone out there is probably mentally screaming at me "you fool!" at this point. With hindsight, I agree...
I was hoping the piece would end with what you would do now (or what should you have done) when Alex called you. Did I fail to understand something in the piece, and simply staying on the phone with Alex would have somehow avoided the fraud situation down the line? It doesn't seem so?
If I were to get such a call, today, my instincts would be to engage in the same "I'm fine" get-off-the-phone-fast actions. What is the alternative?
I basically never want to talk to anyone at any bank, like any other utility.
You create a startup -> Do you need to do anything special with regard to the bank you chose?
(Also close the account. No bank should lose money like that.)
I wonder why the investors didn't at least do some due diligence into where the money was being stored?
My understanding of banks is much like his naive version. So what's the more enlightened understanding?
supportengineer•2h ago
Here's a better idea, guys. Tell me your value proposition. How can I get access to your luxury box? Will you lend me money at ultra-low rates? How about a free toaster? Anything?