Startup Treasury Management:
Where to Actually Park Your Cash After SVB

Short answer

After SVB, keep only a few weeks of operating cash in your main bank account and spread the rest across insured cash-sweep networks, government money-market funds and short-dated Treasury bills. A four-tier treasury policy covering operating, reserve, strategic and yield buckets keeps cash safe and liquid while still earning a return.

Silicon Valley Bank held a higher share of uninsured deposits than any other large bank in the country, more than 90% of its total by a Congressional Research Service estimate, when it collapsed in barely two days in March 2023. That is what turned startup treasury management from a back-office afterthought into a board-level question. This playbook lays out a four-tier policy for where to hold startup cash so it stays safe and liquid while still earning something close to the risk-free rate.

Most founders sit at one of two extremes. Either every dollar is in one operating account earning nothing, or someone has been talked into a "treasury product" chasing a yield they don't fully understand. The middle path is a written policy that sorts cash by when you'll need it.

Where should a startup keep its cash after SVB?

Split it by time horizon, not by whichever bank your investors introduced you to. Keep about a month of operating cash where you can spend it today, park the next few months somewhere insured and liquid, and move everything beyond that into government money-market funds and a Treasury-bill ladder. The single rule underneath: cash you need for payroll should never carry market risk, and cash you won't touch for six months shouldn't earn zero.

The failure of SVB made the logic concrete. When the bank went down, the money at risk wasn't the insured slice; it was the millions above it. Payroll for hundreds of companies was frozen over a weekend until the U.S. Treasury invoked a systemic-risk exception to make all depositors whole (FDIC). You cannot plan around a government rescue. You can plan around not concentrating your runway in one account.

The FDIC limit is smaller than your runway

Federal deposit insurance covers $250,000 per depositor, per insured bank, per ownership category, with no exceptions (FDIC). A seed-stage company holding $2 million in one business checking account is insured on 12.5% of it. The other $1.75 million depends entirely on that one bank staying solvent. That is deposit-concentration risk, and it is the exact exposure that took companies to the brink in March 2023.

What the SVB collapse actually taught founders

Three lessons, and none of them is "pick a safer bank."

First, insurance caps are per bank, so spreading balances across several insured banks multiplies your coverage. Insured cash-sweep or deposit-network accounts automate this: they take one deposit and distribute it across a network of banks in sub-$250,000 slices, so a single relationship can carry millions in FDIC-insured coverage. You get one statement; the network handles the splitting.

Second, a bank deposit is an unsecured loan to that bank. A U.S. Treasury bill is a direct obligation of the federal government, and a government money-market fund holds mostly those same bills. Moving cash from a deposit to a government-backed instrument changes who has to fail before you lose money.

Third, yield is not the enemy; duration and credit risk are. SVB itself blew up partly by holding long-dated bonds it was forced to sell at a loss. The lesson for your own cash is the mirror image: stay short, stay high-quality, and you can earn a real return without taking the risk that sank the bank.

The four-tier startup treasury policy

Here is the framework. Sort every dollar into one of four tiers by when you realistically need it, then assign each tier an instrument category and a target allocation. The percentages below are illustrative, because your split depends on your burn rate and runway, but the ordering is not.

Tier 1 — Operating: liquidity first, yield last

This is the money that runs the company this month. It lives in your operating bank account and an insured cash-sweep account linked to it. The job here is same-day access, not return. Keep roughly one month of operating expenses; topping it up from Tier 2 is a routine transfer, not a fire drill.

Tier 2 — Reserve: insured and one day away

The next two to three months of spend. This is your shock absorber for a slow-paying customer or a hiring push. A government money-market fund settles in a day, and an insured deposit-network account keeps the whole balance under FDIC coverage. Both are safe; the point is that you never have to sell anything at a bad price to fund Tier 1.

Tier 3 — Strategic: the bulk, laddered

For most funded startups this is the largest tier, the cash from your last round you won't spend for several months. A Treasury-bill ladder fits it well. T-bills mature in one year or less, in terms of 4, 8, 13, 17, 26 and 52 weeks, and are sold in $100 increments through TreasuryDirect (U.S. Treasury). Buy bills that mature in a staggered sequence, some every month or two, and each maturity hands you cash on a known date, so you're never forced to sell early.

Tier 4 — Yield: only what's truly spare

Only reach this tier once you hold more than 12 to 18 months of runway. This is surplus you can lock up a little longer in 26- to 52-week bills or leave in a government money-market fund. Even here, capital safety comes first: no equities, no corporate credit, no speculative assets, nothing with duration risk. The goal is to extend runway with yield, not to run a hedge fund on the side.

Cash sweep vs money market fund vs T-bills

Founders ask which one to use as if it's a single choice. The four-tier policy uses all three, each where it fits. The differences that matter:

Government money-market funds run under SEC Rule 2a-7, which caps maturity, demands high credit quality, and, after the July 2023 reforms, requires at least 25% of assets in daily-liquid and 50% in weekly-liquid holdings (SEC). Those rules are why a government money-market fund behaves like cash rather than like a bond fund.

How much yield are you leaving on the table?

Do the arithmetic, because it's larger than founders expect. In mid-2026 the 3-month Treasury bill yielded about 3.8%, and government money-market funds paid in a similar range (U.S. Treasury data). Round that to 4% for a clean number.

A company sitting on $1,000,000 of idle cash in a zero-interest account for two years gives up roughly $75,000–$80,000 in forgone yield. At a $150,000 monthly burn, that's close to two extra weeks of runway you handed back for nothing. Scale the balance to $5 million and the same idle two years costs about $400,000.

The mistake in the other direction is worse. Founders reaching for an extra point or two of yield by taking on credit or duration risk are betting the runway to earn a rounding error. It's the same overconfidence that distorts other founder money decisions. Tier 4 exists precisely so the temptation has a safe home.

Your one-page startup treasury policy

Write this down and have the board approve it. A treasury policy is one page, and it turns cash decisions from ad-hoc judgement calls into a rule anyone on the finance team can follow.

• Objective, in order: preservation of capital, then liquidity, then yield. Never reorder these.
• Tier targets: the four tiers above, with your own percentages and dollar bands.
• Approved instruments: operating account, insured cash-sweep/deposit network, government money-market funds, U.S. Treasury bills. Everything else is off-limits without a board vote.
• Concentration limit: cap uninsured exposure at any single bank (often near the $250,000 insured line).
• Counterparties: which banks and fund categories are approved, and the minimum you require of each.
• Who can move money: named approvers, dual authorisation above a threshold, and how transfers are logged.
• Review cadence: revisit the policy every quarter and after any raise, because your tier sizes move with your balance.

What this means for you

Treasury is not about chasing yield; it's about never being forced to sell at the wrong time or waking up to a frozen account. Start today with two moves: get every dollar above the insured line out of a single account, and write the one-page policy above. The yield takes care of itself once the cash is sorted by time horizon.

If you raised recently, size your tiers off your real burn and runway. The same runway math in how to calculate startup runway and the distinction in gross burn vs net burn tell you how big Tiers 1 and 2 need to be. Then pressure-test the whole thing against a bad quarter with downturn scenario planning.

Frequently asked questions

How much cash should a startup keep in one bank account?

Keep about a month of operating expenses in your main account for day-to-day spending, and move everything above the FDIC-insured line of $250,000 per bank into an insured cash-sweep network or government-backed instruments. That way no single bank failure can freeze the cash you need to make payroll.

Are money-market funds safe for a startup's cash?

Government money-market funds are among the safest places to hold cash. They run under SEC Rule 2a-7, which limits them to short-dated, high-quality holdings, mostly Treasury bills, and since 2023 requires large daily and weekly liquidity buffers. Stick to government funds rather than prime funds, which hold corporate paper and carry a little more risk.

Does an early-stage startup really need a treasury policy?

Once you hold more than a few hundred thousand dollars, yes. A one-page policy setting your tier targets, approved instruments, concentration limits and who can move money takes an afternoon to write. It removes both the concentration risk that hurt companies in 2023 and the temptation to chase unsafe yield. Investors increasingly expect one after a priced round.

Can you extend runway just by earning yield on idle cash?

Yes, though modestly. At roughly 4%, $1 million earns about $40,000 a year, real weeks of runway at a typical burn, with no dilution and no new risk if you stay in Treasury bills and government money-market funds. It won't replace a fundraise, but leaving cash in a zero-interest account is a cost with nothing to show for it.

Sources

1. FDIC — Understanding Deposit Insurance. https://www.fdic.gov/resources/deposit-insurance/understanding-deposit-insurance
2. FDIC — FDIC Acts to Protect All Depositors of the former Silicon Valley Bank, March 12, 2023. https://www.fdic.gov/news/press-releases/2023/pr23019.html
3. U.S. Department of the Treasury — Treasury Bills, TreasuryDirect. https://www.treasurydirect.gov/marketable-securities/treasury-bills/
4. U.S. Securities and Exchange Commission — Money Market Fund Reforms (Rule 2a-7), July 2023. https://www.sec.gov/rules-regulations/2023/07/s7-22-21
5. Congressional Research Service — Deposit Insurance and the Failures of Silicon Valley Bank and Signature Bank, 2023. https://www.congress.gov/crs-product/IF12361