SeedBlink Blog

We are so used to the banking sector and its presence in our lives, we have such an intimate relationship with loans and interest rates in general, that every time we talk about financial services, our thoughts go either to our home bank or to the latest star of global bankruptcies, or just those in the USA. Every time there is a small or big shock somewhere in the world, we all hold our breath, fearing that the effects will somehow reflect on us.

We behave as if we are all a small part of the system and for that reason, we deserve our fate, whatever it may be. Nobody owns the absolute truth, but it seems that banks are the rulers of a very large system of clients, both on the deposit and credit sides. Not to mention payment services and other hybrid products, where we are all active actors, with or without our consent.

Therefore, banks are, on the one hand, profitable organizations that do not fulfill any social role, and on the other hand, they constitute the vascular system of the economy, an apparently indispensable agent that catalyzes the exchange of money and products, both at the level of companies and personally.

Can you imagine life without cards? At first glance, yes, but in fact, behind the cards, there are monetary aggregates that, although apparently just statistics, actually represent the measure of the level of civilization that nations achieve. That being said, by putting banks face to face with technology, specifically with startups in the tech industry, we will break the unwritten rule.

Does the banking system offer all the technology products necessary? Are banks adapted to the needs of a startup trying to raise funding? It seems that unanimously the answer is "no."

All companies in this sector do is adapt existing products, deposit their money in the safest conditions possible, and maintain their relationships with their shareholders externally on the one hand, and extremely primitive on the other. When you have no other visible benefit, you cling to the only apparent benefit, which is safety.

Another example that demonstrates the great mismatch between startups and banks is the "life and death" Silicon Valley Bank, which to become profitable, ended up with many tens of billions in deposits that it could not efficiently use, given that the bank's clients could not access classic model loans. Furthermore, fund managers spread rumors that the bank was in trouble, accelerating withdrawals from accounts and turning the bank's problems into a spectacular fall that chilled the blood of its founders.

In all known literature, when talking about the reasons why a startup fails, banking risk is not listed anywhere. Everyone has always considered the system to be robust enough to withstand shocks, but when startups focused on a single bank, the risks became threatening.

So, what happens when a bank specializes in the field of technology startups? Where is the strategic mistake? Is there such an error? Theoretically, anyone can build one at the tactical level. But is this a viable solution? Can the conceptual differences between the two sectors be overcome when these differences are what make banks operate profitably? Is there a recipe that combines needs with profitability with risk management?

If I were to find a solution right now, I would think of something other than a bank. I would leave deposits out of the equation and build appropriate financial services starting with equity management and organizing fundraising rounds.

When it seems impossible to adapt the banking system to the needs, you invent another external system that solves problems without creating strategic conflicts. SeedBlink and its newcomer Nimity are just the beginning. The financial system for startups is a rising star. This is what we firmly believe at SeedBlink and this is what we are putting into reality.

We will continue the antithesis with the conventional equity market: the Stock Exchange. In this case, we will discuss a double problem: that of startups and that of investors.