During A Crisis, Your Fractional CFO Morphs into a Platoon of Experts

With the right firm, fractional executives quickly extend expertise exponentially

TechCXO and The SVB and PPP Use Cases

In crisis, conflicting information, rumors, speculation — even panic — reign. The ability to find reliable, actionable information is at a premium. In a fractional executive model, a business can quickly turn a quarter or half of a CFO, COO or CTO into 50 experienced, coordinated executives.

SVB & 40 Hours

The Silicon Valley Bank collapse happened in less than 40 hours.  On the night of Wednesday, March 8, SVB publicly announced it was seeking capital to stem concerns about liquidity. By Noon of March 10, federal regulators informed the market and public that SVB had failed and was placed into receivership.

If you banked with SVB or knew someone who did, you knew the mad scramble and chaos that ensued by senior executive teams, CFOs, Controllers and Boards in those days to (1) Get a balance statement of how much was held there, particularly if it exceeded the $250,000 FDIC protection limit;  (2) Find another institution willing to quickly secure your money in a new account; and (3) Get money wired out of the failing banks and into the new institution(s).

The cost benefits of a fractional executive are well known. What’s less well appreciated is how an organization such as TechCXO can exponentially increase access to expertise, information, and connections quickly

At the height of the crisis, conflicting information about slowed down or shut down wire out processes was swirling. There were rumors of FDIC and Federal Reserve intervention, loan deals from “white knights” to rescue SVB and shore up depositors, liquidation of SVB’s Treasury Securities to serve as a dividend for depositors, and even an FDIC portal and hotline to file claims. During all this, trading on First Republic, Signature Bank and Western Alliance halted, adding to the nervousness of full-on banking and financial systems meltdown.

Within hours, TechCXO’s 50+ CFOs from around the country had solid, actionable information, and were quickly separating rumor from fact, including:

  • VCs and the LPs (Limited Partners) for many tech portfolio companies were indeed having difficulties with wire out processes. Loan deals in process were likely at risk.
  • Reliable sources said plans to raise capital to save SVB were not successful
  • Updates regarding FDIC phone numbers and claims portal, along with instructions
  • Options to diversify to a secondary bank or to secure a new primary bank were recommended, including reliable references and contact info for specific representatives.
  • Real-time updates related to accessing accounts and the status of wire payments, as well as alternative platforms in FinTech and Cryptocurrency, such as Bitcoin.
  • Posted warnings about fraudulent SVB websites
  • Even supplemental state-led insurance options above FDIC backstops were provided.

The Benefits of Connected, Networked Executives

The benefits of fractional executives in terms of cost savings is well-known, as are the perks of accessing a higher-level of executive talent than your organization might warrant in early stages. What’s less well appreciated is how an organization such as TechCXO can exponentially increase access to expertise, information, and connections quickly.

TechCXO CFO Partners quickly formed a Slack channel and a division of labor to gather information and filter it through a subgroup to be disseminated to all partners. It accessed its vast network of bankers, VCs and PE partners, accountants, company executives, lawyers and others to settle on a reliable set of facts from which to act. Even a large, enterprise-level companies that are well staffed don’t have this level of experienced C-suite executives that the TechCXO partnership represents. Also, new entrants to fractional and interim executive resources, such as large Executive Search firms, don’t have this connected, collegial bench of executives from which to draw knowledge.

PPP As Training Ground

TechCXO had been here before during the COVID outbreak and the subsequent opportunity — and confusion — surrounding The CARES Act Paycheck Protection Program (“PPP”) or 7(a) loans program, as well as the The Small Business Association’s Economic Injury Disaster Loan (EIDL) program, which provided small businesses with working capital loans of up to $2 million.

Similarly, there was much confusion about eligibility, requirements, and restrictions in a constrained time period. Then, as today, TechCXO pooled its intellectual capital and experience to quickly and reliably guide clients through the fog. One product was the decision tree (see graphic) that TechCXO provided its clients, vendors, partners, and colleagues to guide them through programs that were proper for them.

50 for the Price of 1/2

Fractional executives always make sense in times of recession, inflation, labor shortages and fast growth for accessing talent, realizing savings, and gaining efficiency. In times of crisis, accessing a platoon of proven, experienced executives through your one on-demand executive relationship may hold the greatest value of all.