Hidden Figures: The Unseen Impact of SVB’s Collapse on Underrepresented Founders

Visible Hands
6 min readMar 17, 2023

Why “diversity demands” aren’t distracting, but rather are paramount in times of financial crises

VH Co-Founder & General Partner Yasmin Cruz Ferrine (Center) in front of the NASDAQ Opening Bell with the Goodie Nation, Google for Startups, and Inicio Venture communities for Hispanic Heritage Month.

Last week, breaking news headlines about Silicon Valley Bank (SVB) and its sudden collapse in the financial market infiltrated our lives at a breakneck speed. Article after article populated the internet covering how this happened — how could a top 20 bank considered a stable, well-resourced pillar in the venture capital and startup ecosystem fail so abruptly?

I spent the weekend taking in this news and communicating with my own investors (limited partners) and portfolio company founders late in the night into the early morning, with a lingering sense of shock at the disconnect. The evenings were sleepless, not just from the development of the days and ramifications on livelihoods, but because of the opinions that followed. The conversations around SVB’s closure shortly pivoted from what was happening, the underlying balance sheet, and the lack of risk mitigation to conversations about who caused this.

Most notably, the Wall Street Journal published an article by Andy Kessler suggesting that SVB’s focus on diversity may have led to its demise. In his exact words:

“Was there regulatory failure? Perhaps. SVB was regulated like a bank but looked more like a money-market fund. Then there’s this: In its proxy statement, SVB notes that besides 91% of their board being independent and 45% women, they also have ‘1 Black,’ ‘1 LGBTQ+’ and ‘2 Veterans.’ I’m not saying 12 white men would have avoided this mess, but the company may have been distracted by diversity demands.”

I can attest that SVB’s undeniable commitment to diversity did show up in their sponsorship strategy and mid-level/junior hiring practices. However, the irony is seated around the decision-making table during this crisis; the makeup of the highest rung of leadership did not follow suit. America’s population is 70% women and people of color, yet the SVB executive leadership team included nine white men and three white women.

“Diversity demands” aren’t distracting, but rather they can help steer away from status quo thinking in times of crisis.

The Execute Team at SVB.

Additionally, the conversations also began oscillating toward a narrow narrative of who in the tech space would be affected by this closure. A stereotypical image of a young, privileged, and financially stable “tech-bro” was painted as the main victim of the collapse.

These conversations reminded me that folks who don’t look like nor come from the expected backgrounds of that “tech bro” stereotype remain invisible and largely out of focus from view. We remain peripheral supporting characters, useful when looking for a scapegoat to distract from the narrative of how individualistic players used social platforms to incite fear, uncertainty, and doubt.

As a Co-Founder and General Partner of Visible Hands, I made it a personal mission of mine to create a space in the VC and entrepreneurship landscape where those who have been historically marginalized can finally be seen and supported. At VH, that is our main function as a venture capital firm — we work to empower amazing talent that has been often overlooked, and we utilized SVB as our bank of choice for our VC fund and a meaningful percentage of our founders.

At VH, we fund underrepresented founders who make up 92 portfolio companies. I spent the weekend talking to Black, Brown, and Female founders building venture-backed pre-seed to Series B stage companies. I focused my time and attention on those who recently closed multi-million dollar rounds with potentially devastating exposure to SVB’s demise. I also checked on a diverse set of fund managers, all of whom would be affected by this financial crisis, and yet we’re still fighting to be included in the narrative. In this high-profile moment, these founders and funders are overlooked. The current narrative around SVB’s closure and subsequent reopening are incongruent with my experience over that unforgettable stretch of 96 hours. Our narrative is missing. So while some may continue sharing a lop-sided opinion on how diversity exacerbates this financial crisis, I want to focus a bit on how this crisis will largely impact “small-tech” diverse founders.

Ferrine (Left of Center) alongside Jorge M. Calderon and Joey Womackin ringing the NASDAQ Opening Bell.

SVB’s closure could lead to an immediate reduction in funding for underrepresented founders

Women founders and founders of color received less than 2% of VC funding before we hit a bear market. At the end of this first quarter, we’ll have the facts and figures or “receipts” on whether “a flight to quality” has a racial/gender pattern. Our founders were already defying the odds of getting to multi-comma, oversubscribed venture rounds when the capital spigot slowed; they’re working twice as hard to get half the recognition in order to raise funds with a fraction of privilege behind them. They are not flying private, eating caviar topped seafood towers funded by their investors. They are putting their capital to good use. My hope is that SVB’s closure and reopening will not leave funders from all angles of the ecosystem startled and clinging to dry powder. If so, SVB’s collapse may amplify an already stark reduction in 2023 to capital allocated to underrepresented founders and fund managers.

Ferrine speaking with Ebony A. Thomas on Visible Hands’ partnership story with Bank of America.

Surviving this crisis will require founders who are resilient

Fundamentally, early-stage venture capital is about investing in people. So much of what the founder thinks is going to play out in the early innings will change, requiring massive pivots. One of the things we at Visible Hands look for in founders when assessing potential investments is resilience. The founders’ ability to manage despite ambiguity sounds “soft,” but it has really played out since last Thursday.

Visible Hands’ 2022 Visionary Accelerator cohort founders.

During the initial day of the SVB crisis news, I connected with one of our portfolio founders, Noelle Acosta of Noula Health, who at the time relied on SVB as a banking partner. Noelle, who had every right to be stressed, disappointed, confused, shocked, and upset about the news and the high financial risk it put her company in, was, as she described it, “surprisingly calm” through the situation and even acknowledged her willingness to be a pillar of support for me, one of her investors, during the crisis.

I also emailed with another black female founder that recently raised $20M, who, on March 9th, focused on setting up an emergency board meeting and encouraged others to “believe in you and your power to make great decisions for your companies.” These responses from venture-backed founders were not congruent nor present in the image projected in the media.

Upon reflection, there is a coincidence in my career. I experienced the Global Financial Crisis three years into my career as a buy-side analyst. Then, nearly three years into co-founding VH, I experienced another crisis, this time in a leadership role with closer ties to the parties involved. As the SVB-saga continues to unfold, and no matter how it ends, it has brought to light the continued need for a broader set of narrators. We do not want to create a single solution to the so-called “diversity distraction,” but rather an ever-evolving better resourced ecosystem to empower overlooked founders to build successful startups while working towards more equitable VC and founder experiences.

Below are some resources we’ve been collecting for our founder community at VH since the start of the SVB news — feel free to leave any additional resources in our comment section below.

-VH Co-Founder & General Partner, Yasmin Cruz Ferrine

Resources for Founders

This thread on how founders can decide where to park their capital

This airtable of different investors and accelerator programs for underrepresented founders

This article on How 3 female founders scrambled to protect their startups as SVB collapsed: ‘There was no playbook’

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Visible Hands

Visible Hands is a VC fund with a 14-week, virtual-first fellowship program that supports overlooked talent in building technology startups.