- The collapse of Silicon Valley Bank caused panic among startup founders and venture capitalists this past weekend.
- The founders of Asian food startup Omsom have posted the company's experience on social media.
- Vanessa Pham says the bank's collapse threatens small businesses as well as wealthy venture capitalists.
Vanessa Pham was showing off her lemongrass barbecue sauce and yuzu miso glaze at the Expo West annual conference last Thursday when she first learned of the troubles at Silicon Valley Bank.
Other founders have shared articles and investors have told them to withdraw their funds, Pham, CEO and co-founder of food startup Asia Omsom, said in an email interview with Insider. The news left Pham confused: all of Omsom's money was with SVB, a bank heavily used by startups and venture capitalists.
Pham immediately reached out to her sister and co-founder, Kim, and said their conversation "went from shock and disbelief to fear and concern about the impact on the business."
Pham tried to withdraw the company's money from SVB on Friday morning, but was unsuccessful. That afternoon, federal regulators shut down SVB and depositors lost access to their accounts.
Immediately, the sisters went into "problem-solving mode," Pham said, and Kim used her previous experience in venture capital to ask the firm's investors for help. Pham's advisory expertise helps you plan for various possible outcomes based on their access to your funds.
They also reach out to other small business owners to offer resources and encouragement.
“There are offers to introduce you to new banking partners, to share emerging short-term loan providers, to be there for each other,” Pham said. "To be honest, it was pretty moving."
The founders wrote letters to clients about what the collapse of SVB would mean for the company and shared them on Instagram and LinkedIn. In the letter, they wrote that they weren't seeking leniency, but that they wanted to tell people what it's like to "deal with a recession, a pandemic hangover, sociopolitical trauma, and now the second-largest bank failure in American history." "
They ask customers to stock up on Omsom products, buy gift cards and share Omsom messages. The Instagram post has more than 15,000 likes, and Pham said the two posts combined have received more than half a million views.
“Watching our community come together, anchor and grow over the past few days has been both reassuring and energizing,” Pham said. "Our focus now is how we can prevent that in the future and how we can continue to be there for our wonderful community, ride or die."
On Sunday, federal regulators announced that SVB depositors would have access to all of their funds the next day. For Pham, it was a real relief.
In a subsequent Instagram post, the Pham brothers wrote that the weekend got them thinking about how "the failure of America's banking system has shaken us all, small businesses and consumers."
Pham says it's a common misconception that the SVB's collapse only poses a threat to big institutions, like wealthy venture capitalists or big start-ups. Often it's "the smallest and most marginalized groups that feel the brunt of the impact," he says, like Omsom, which is an early-stage company.
The Omsom team wanted to be transparent about their experience with SVB, Pham said, due to the support provided by the community, especially during the pandemic when the company was founded.
“Being proud and loud is in the DNA of this business, and it's not just about celebrating wins, it's about exploring what it's like to run a small, gay-owned WOC business,” Pham said. “We've shown over the past few years that consumers realize they can make real change with their money and their vote: They see not only what goes into their product, but also who is behind it and the values they represent.”
Omsom is now conducting due diligence with investors and advisors, including working with other banks and diversifying the funds it holds, it said.
“On the product side, our goal is to ensure Omsom's offerings, which represent many Asian cuisines and cultures, shine through the uncertainty that surrounds us during and after the SVB crisis,” said Pham.