Locked out of her three accounts with the failed Silicon Valley Bank, cookbook author Anna Vocino spent the weekend in a state of high anxiety, uncertain about the future of her sauces and sauces business. spices.
“I spent most of Friday afternoon writing to all of our creditors and saying, ‘Hey, I know we owe you some money now, but I hope all is well over the weekend. end’,” she said. “‘If not, please have mercy on us.'”
By Monday morning, Vocino was able to successfully log into the Silicon Valley Bank website and begin the process of closing its accounts. She transfers her money to the City National Bank.
“I would just feel more comfortable somewhere else,” said the Solvang resident and owner of Eat Happy Kitchen.
Many other small business owners felt the same way after the Federal Deposit Insurance Corp. seized the Santa Clara, Calif. bank on Friday, followed by state regulators’ takeover of New York’s Signature Bank on Sunday.
Monday became a day of massive cash movements and account closures after what one winemaker called a “crisis purgatory” over the weekend, with account holders panicking that they could not easily access or quickly to their money. Customers flooded Silicon Valley Bank’s website en masse while others rushed to branches of other vulnerable banks.
The financial scramble came despite assurances from President Biden, who told Americans that decisions by the US Treasury, Federal Reserve and FDIC will ensure that “the banking system is safe. Your deposits will be there when you need them.
“I thought maybe my business was over and I was angry,” said Anthony Coombs, chief executive of Santa Monica-based underwear company Splendies. He called the previous 48 hours “absolute chaos” and said he transferred 80% of his company’s funds to Silicon Valley Bank.
“It wasn’t a stupid investment; it wasn’t bad planning – it was the company’s money in a bank where it’s supposed to be safe,” he said.
Before Coombs learned if the cable had gone through on Monday, he had counted his savings, prepared to use it to pay payroll for his 13 employees and contacted suppliers, who told him that the payments due in the next two weeks could be spread over the following two months.
Many startup founders have spent the weekend racing to find ways to make ends meet for their businesses.
Lauren Wang, who runs sustainable products company Flex, was kicked out of her company’s money at Silicon Valley Bank on Friday. The next day, she went to a Chase bank in Calabasas to open a business account and transferred half of her family’s cash savings there to complete payroll for Flex’s 30 employees by Monday.
It was about “taking measures to protect our employees first and figuring it out later,” Wang said. “We had no idea what was going to happen with the bank.”
For people who used Silicon Valley Bank as their main source of banking services, the collapse served as a lesson in diversification. King Alandy Dy, founder of San Francisco artificial intelligence logistics company Expedock, spent Friday queuing at Chase and Wells Fargo locations in Piedmont to set up new accounts — with several other startup owners doing so. likewise.
On Monday, he wired his money from Silicon Valley Bank. “I’m just trying to get a decent spread,” he said of his new banking strategy.
Tegan Passalacqua of Sandlands Vineyards in Napa learned of the bank’s failure last week from her boss, who “called me and said, ‘I hope you don’t have any money in Silicon Valley Bank’, and I said, ‘I got all my money at Silicon Valley Bank.
Passalacqua has been doing business with the financial institution for 11 years and has more than half a million dollars in two accounts, which he uses to pay business expenses such as agricultural contractors, glass and cork makers and shipping services.
“I didn’t have a lot of wiggle room on my balance sheet,” he said. “There are a lot of people saying, ‘It’s going to be fine at the end of the day,’ but you don’t know that until you have access to it.”
Things generally went well on Monday after last week’s bank run frenzy, but there were still some hiccups.
Shortly before noon, Isa Watson, founder of social media startup Squad, said the company was still unable to access her Silicon Valley Bank account and continued to encounter error messages.
“It’s definitely another scramble day,” she said.
His company is switching to Chase and hopes to have these new accounts created by the end of the day. But until his Silicon Valley Bank funds are accessible, Watson is responsible for Squad’s expenses. She began receiving failed payment notices on the company’s Silicon Valley Bank credit cards on Saturday and paid bills with her personal cards.
“I run a software company, we’re in the consumer social space, we have a tech app and an audio app,” she said. “I can’t get my main database released because it hasn’t been paid for.”
Watson said the sudden collapse of Silicon Valley Bank, which served more than half of all venture capital-backed tech startups in the country, left the founders “rethinking how we approach banking.”
Going forward, startups will need to take “more of a front-row seat and strategy to how we do our banking,” she said, “which is just not something we thought with as much intention before”.
The fallout from Silicon Valley Bank has spread to other financial institutions, with First Republic Bank shares falling 62% on Monday despite assurances from the San Francisco-based bank that funding from the Federal Reserve and JPMorgan Chase had strengthened its finances.
A First Republic branch in Studio City was packed with customers on Monday. One said he arrived at 9:30 a.m. to withdraw $340,000 and wire it to Bank of America.
“They told me it would take half an hour,” he said. “Now it’s one o’clock and we still don’t have any money. They tell me now three hours. I am a bit worried.
A First Republic employee tried to reassure him, saying, “It’s a busy day so it’s taking a little longer.
Another client said he decided to withdraw a $200,000 certificate of deposit to reach the $250,000 FDIC insured limit. He said he feared the bank might go bankrupt and decided to pay a $4,000 penalty to withdraw the CD early.
As customers rushed to move their cash on Monday, sellers watching from the sidelines said they hoped the turmoil would not trickle down to their businesses.
Besides being a major bank for tech startups, Silicon Valley Bank was also deeply rooted in the wine industry. For days, winemakers have been trying to figure out which of their winemaking clients used Silicon Valley Bank, fearing they might not get paid on time, said Jennifer Thomson, owner of Thomson Vineyards, a contract producer in Napa.
“The number one thing that technicians who own a winery don’t pay is the producer,” she said.
Times writers Terry Castleman, Daniel Miller, Russ Mitchell and Melody Petersen contributed to this report.