Food Tech Founders Navigate Chaos of SVB Collapse and Subsequent Fed Intervention
If you’ve been overseas when the big news is happening at home, it can feel disappointing.
I felt that to some extent last week when the Spoon team was in Europe to attend the HIP conference in Spain and went to the Basque Culinary Center. Like many of you, I have been trying to keep up with the news about the collapse of SVB and wondering if the collapse of the bank will lead to a contagion like 2008, but every time I do so from a different time zone and foreign world.
But that sense of discouragement no doubt paled in comparison to what many food tech innovators felt as they tried to figure out what this all meant for their companies. Many were directly affected by having large amounts of their funds sitting in SVB accounts, and I watched updates on Twitter, LinkedIn, and other social media channels as founders communicated in real time as they navigated the looming financial crisis.
One of those companies was Omsom, a fast-growing CPG brand founded by sisters Vanessa and Kim Pham to bring a mix of Asian flavors to consumers through DTC channels. The company published an open letter via Instagram late last week explaining how they were looking into the issue and asking for help from their customers.
“Silicon Valley Bank collapsed yesterday in the second largest bank failure in American history – and it was our bank,” they wrote. “This is an open letter from our founders about what happens next + how you can help 🙏🏽.”
Like many investors, they are filled with panic in the week ahead before the Fed, the US Treasury, and the FDIC announce their plans to deal with the crisis.
Jasmin Hume of Shiru of Shiru has not only felt the confusion that a founder must feel when bombarded with this kind of news but, like me, has been trying to navigate the news while traveling overseas. He wrote about how he faced this problem while traveling in Japan on his way to Spain on his LinkedIn:
The past few days have been exhausting reading and responding to the collapse of SVB while I was in Japan on business. The next few days are not going to be easy, and thinking about them takes my breath away:
Today I am flying to Spain where I have an 18 hour layover to pick up my 10 month old son who was there with family. During the downtime I need to work with my team to navigate and do anything that affects Shiru given any SVB updates on Monday. On Monday we’re also announcing a big, regularly scheduled, milestone for Shiru (more on that soon!). Tuesday I’m flying to SF with my son (something like 4 flights, about 30 h of travel combined over the next 2 days across 17 time zones – half of that with a baby). Then I’m back in the office in Alameda on Wednesday for 5 sessions with a site visit and tasting with investors/partners followed by a Future Food-Tech talk on Thursday and other conference stuff on Friday. All this while helping a very neglected child fix up his home in Oakland.
Stateside, many up-and-coming food startup founders have been trying to navigate this dilemma while trying to showcase their products at one of the food industry’s biggest concourses, Natural Products Expo West. One such inventor was Darko Mandich of Melibio, a company developing an alternative to honey through precision fermentation. Mandich was working in the booth when he started receiving a lot of messages from his colleagues about the SVB problem.
“From three different investors, I got messages that were going around,” Mandich said in an interview with Food Dive. “‘Did you see the news?’ ‘Are you exposed to SVB?’ ‘Darko, you may have to react to this.'”
“And I said, ‘What’s going on?'” Mandich continued. “Then I looked at the news, and I was really shocked.”
Many of the founders affected by the crisis expressed relief when the Fed, the Treasury, and the FDIC issued a joint statement on Sunday explaining how they will ensure that all funds deposited at SVB and another financial institution, Signature Bank, will reach all of their deposits on Monday, March 13.
Omsom updated their Instagram message on the news of the US government intervention: As of 6:15p ET, a statement was released by the Treasury, Federal Reserve, and FDIC saying that all SVB depositors will be able to access their accounts starting Monday 3/13! We won’t breathe easy until we get our funds, but DEFINITELY this is a win 😭.
But like innovators throughout the startup world, those leading food tech companies are just becoming aware of institutional risk and figuring out how to manage it moving forward.
Stephen Kalb, CEO of Seattle-based Shelf Engine, began withdrawing his money from SVB on Monday, telling PBS that he had learned “a very hard lesson.”
“It is clear now that the banks are not as safe as I thought,” he said.
