Silicon Valley Bank’s collapse had startup founders and venture capitalists in a panic last weekend.
The founders of Asian food startup, Omsom, posted about the company’s experience on social media.
Vanessa Pham said the bank’s collapse threatened small businesses, in addition to rich VC firms.
Vanessa Pham was showing off her lemongrass BBQ sauce and yuzu miso glaze at the annual conference Expo West last Thursday when she first heard about Silicon Valley Bank’s struggles.
Fellow founders were sharing articles and getting told by investors to move their funds out, Pham, the CEO and cofounder of Asian food starter company, Omsom, said in an email interview with Insider. The news threw Pham into a spiral: All of Omsom’s money was in SVB, a bank widely used by startups and venture capitalists.
Pham immediately reached out to his sister and cofounder, Kim, saying their conversation “went from shock and disbelief, to fear and concern around impacts to the business.”
On Friday morning, Pham tried to wire the company’s money out of SVB, but was unsuccessful. That afternoon, SVB was shut down by federal regulators, and depositors lost access to their accounts.
Immediately, the sisters went into “problem-solving mode,” Pham said, with Kim using her previous experience in VC to tap the company’s investors for help. Pham’s background in consulting helped her plan for the various outcomes that could occur depending on how much access they’d had to their funds.
They also checked in on other small business owners to offer resources and encouragement.
“There were offers to introduce each other to new banking partners, to share promising short-term loan vendors, to just be there for one another,” Pham said. “It was honestly quite touching.”
The cofounders wrote a letter to customers about what SVB’s collapse meant for the company and shared it on Instagram and LinkedIn. In the letter, they wrote that they weren’t looking for pity, but wanted to let people know what it was like “navigating a recession, the hangover of a pandemic, sociopolitical traumas, and now the second largest bank failure in American history. “
They asked customers to stock up on Omsom products, buy gift cards, and share Omsom’s posts. The Instagram post has over 15,000 likes, and Pham said the two posts, together, garnered over half a million impressions.
“Watching our community rally, anchor, and grow in the last few days has been so humbling and energizing,” Pham said. “Our focus now is how can we prevent this in the future and how can we continue to show up for our amazing community, our ride or die.”
On Sunday, federal regulators announced that SVB depositors would be getting access to all of their funds the following day. For Pham, it was a feeling of pure relief.
In a follow-up Instagram post, the Pham sisters wrote that the weekend caused them to reflect on how “the failures of the American banking system jerked all of us around, both small businesses + consumers alike.”
Pham said it’s a common misconception that SVB’s collapse only posed a threat to larger institutions — like wealthy VC firms or massive startups. It’s often “the smallest, most marginalized groups who feel the impact the heaviest,” she said, like Omsom, which is a seed-stage company.
The Omsom team wanted to be transparent about its experience with SVB, Pham said, because of how supportive its community has been, especially during the pandemic, which was when the company was founded.
“Being proud and loud is the DNA of the company, and that’s not just celebrating the wins, but actually peeling back the layers of what it’s actually like to run a small, WOC, queer-owned business,” Pham said. “The last several years have shown us that consumers realize they can make real change through their dollars and voices — they examine not just what goes into their products, but who is behind them and the values they hold.”
Omsom is now doing its due diligence with investors and advisors, including working with other banks and diversifying where funds are being kept, she said.
“On the product side, our goal is to ensure Omsom’s offerings, which represent the multitudes of Asian cuisine and culture, shine in the face of uncertainty that surrounds us in and outside of the SVB crisis,” Pham said.
Read the original article on Business Insider