A small business owner with all his money in SVB says the company was ‘nervous’ by the ‘failures of the US banking system’

Kim (left) and Vanessa Pham with their Omsom food starter packs at Essex Market.Crystal Cox/Insider

  • The collapse of Silicon Valley Bank sent startup founders and venture capitalists into 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 threatens small businesses, in addition to wealthy venture capital firms.

Vanessa Pham was demonstrating her lemongrass barbecue sauce and yuzu miso glaze at the annual Expo West conference last Thursday when she first heard about Silicon Valley Bank’s struggles.

Fellow founders were sharing articles and investors were telling them to move their funds, Pham, CEO and co-founder of Asian snack company Omsom, said in an email interview with Insider. The news sent Pham into a tailspin: all of Omsom’s money was in SVB, a bank widely used by startups and venture capitalists.

Pham immediately contacted her sister and co-founder Kim, saying their conversation “went from shock and disbelief to fear and concern about the business impact.”

On Friday morning, Pham tried to transfer money to the company from 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 virtual capital to reach out to the company’s investors for help. Pham’s background in consulting helped her plan for the different outcomes that could occur depending on how much access they would have to their funds.

They also checked in with other small business owners to offer resources and encouragement.

“There were suggestions to meet new banking partners, share promising short-term loan providers, just be there for each other,” Pham said. “It was quite touching to be honest.”

The co-founders wrote a letter to customers about what SVB’s collapse means for the company and shared it on Instagram and LinkedIn. In the letter, they write that they are not looking for pity, but want to let people know what it is like to “live through a recession, a pandemic hangover, socio-political trauma 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 post. The Instagram post has more than 15,000 likes, and Pham said the two posts combined have garnered more than half a million impressions.

“Watching our community come together, anchor and grow over the past few days has been so humbling and invigorating,” Pham said. “Our focus now is how we can prevent this in the future and how we can continue to show up for our amazing community, our ride or die.”

On Sunday, federal regulators announced that SVB depositors would be able to access all their funds the next day. For Pham, it was a feeling of pure relief.

In a follow-up Instagram post, the Pham sisters wrote that the weekend made them reflect on how “the failures of the American banking system have shaken us all, small businesses and consumers alike.”

Pham said it’s a common misconception that SVB’s collapse only poses a threat to larger institutions — such as wealthy venture capital firms or massive startups. Often, “the smallest, most marginalized groups feel the impact the hardest,” she said, like Omsom, which is a start-up 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 when the company was founded.

“Being proud and loud is the DNA of the company, and it’s not just celebrating wins, but actually peeling back the layers of what it’s really like to run a small, WOC, queer-owned business,” Pham said. “The past few years have shown us that consumers are realizing that they can make a real difference with their dollars and votes — they’re examining not just what goes into their products, but who’s behind them and the values ​​they hold.”

Omsom is now conducting due diligence with investors and advisers, including working with other banks and diversifying where funds are held, she said.

“On the product side, our goal is to ensure that Omsom’s offerings, which represent the multitude of Asian cuisines and cultures, shine in the face of the uncertainty that surrounds us in and beyond the SVB crisis,” Pham said.

Read the original article on Business Insider

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