The Distill - Money Talks

Don’t Bank Where All Your Competitors Bank

March 2023, Silicon Valley Bank collapses in 48 hours. Thousands of startups wake up with no access to their money. Startups who'd put all their money in the bank where the cool tech companies bank suddenly couldn't pay employees or make rent.

The cause was a bond portfolio that imploded when interest rates rose - but the real killer was concentration risk: nearly every depositor was a tech startup or VC, and nearly 75% of their assets were long-term bonds purchased when rates were near zero. When the bank run started, VCs and startups coordinated through Twitter and group chats, and everyone tried to pull their money simultaneously. SVB didn't have the liquidity to cover it.

SVB didn't fail because they were a bad bank. They failed because they were the only bank that mattered to an entire ecosystem. When you bank where everyone in your industry banks, and that bank's assets are concentrated in instruments tied to the same economic conditions affecting your industry, you concentrate all of your risk too.

Banks like Chase survived 2023 because diversification works both ways. Their depositors span healthcare, manufacturing, logistics, retail—industries moving on completely different cycles. Their assets spread across commercial loans, residential mortgages, credit cards, auto lending, international markets. When tech was collapsing, other sectors kept JPM's balance sheet stable. When interest rates spiked, their hedging strategies and diversified asset base absorbed the shock.

The SVB collapse taught a brutal lesson: hyped doesn't mean reliable, and banking at the same place all the VCs and tech startups bank at doesn't make you special—it makes you vulnerable. The smarter move: bank with an institution that's stable because it's diversified. You get the risk management of a global bank without the "everyone goes down together" problem that killed SVB.

Speaking of banking…

JPMorganChase Bets on Louisville's Execution Era

We’re thrilled to announce JPMorganChase as the presenting sponsor of Velocity.

We know KYX isn't for everyone. We're exclusive by design, backing only the startups willing to go all-in—founders who commit to working full-time, in-person, with public accountability and a single-minded focus on customers and revenue. No participation trophies, no coasting, no "validating" forever. Velocity takes that filter and cranks it higher: 12 weeks to 3x your numbers or prove you can't execute under pressure.

For the past 170 years, JPMorganChase has invested in the future of Louisville. Between 2019-2024, the firm has made $8.6 million in philanthropic contributions, including $270K to AMPED’s Russell Technology Business Incubator to support underserved small business owners.

JPMorganChase serves 23,400 small businesses across the Greater Louisville area. If you’re looking for a banking partner, stop by one of their more than 25 branches across the city. Tell them KYX sent you.

We're grateful they're supporting Velocity. Their backing allows us to put go-to-market dollars behind each company in the cohort, and sends a signal: startups and programs relentlessly focused on high-velocity growth are worth investing in.

Block Party: The Office Is Open

Next Friday, October 17th, we're throwing open the doors at 1205 E Washington St for everyone who's been watching us build Cinderblock over the past few months.

When: Friday, October 17 | 4:00 PM - 7:00 PM
Where: 1205 E Washington St, Louisville, KY

There will be food, drinks, games, and a startup diss battle lead by the Swell Boiz and anyone else as enamored with Sora as they are. Check some of the Sora sounds for KYX KYX - Block to Rocket (stream the whole album here)

The Block exists because Louisville needed a place where full-time founders & startups serious about shipping could work alongside each other without the typical interruptions and casual atmosphere of an open coworking space. This is the space where Velocity companies are grinding through their 12-week gauntlet. Where those committed to the 60-hour a week startup grind can actually get work done.

We're celebrating that it's real, it's open, and it's already full of people building. If you've been following KYX, working at Cinderblock, or just curious what we're building here, come through.

RSVP here: https://luma.com/mh8m2mbc

Cinderblock Update: Grinding into the Night

One month after opening, we’re building momentum. Thursday Night Cinderblock hosted a repeat of University of Louisville Sandbox Build Night. The energy was electric, 25 founders working late into the night. Their Demo Pitch was fantastic. Future iterations will be livestreamed…as soon as we move the live stream camera away from the phone booth.

Note’s on The Distill’s EIC: Jack Crowdis

Jack runs the newsletter, helps run KYX. He’s a career startup kid, past founder, and current operator. Weekly contributor. Always editor. If you think he’s missing something, say so—he’s already rewriting next week’s issue.

Know someone who should read this? Forward it, or send them this link.

That’s a wrap 🎬
Keep showing up 👊 
Keep shipping 🚢 
Peace, Pioneers ✌️