The collapse of Silicon Valley Bank is spurring a reckoning over the long-standing practice among venture capital-backed companies to keep the vast majority of their cash in a single financial institution, a concentration that leaves most of those deposits uninsured.

SVB and other providers of venture debt loans regularly stipulate in loan documents that the borrower park their cash with the lender, attorneys working with startups say. SVB touted itself as the first bank to offer venture debt loans—which startups tap to give themselves breathing room before they have to raise another round of venture capital—and had a dominant market share.

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