Sisters Vanessa and Kim Pham, co-founders of Asian flavor kit company Omsom, recently took to social media to document their experience during Silicon Valley Bank’s (SVB) overnight collapse.
In their post on Instagram, the co-founders shared that they held all their capital in SVB, which just days ago was one of the biggest banks for startups in the country.
When the bank collapsed Friday following a run on deposits, the Federal Deposit Insurance Corporation (FDIC) placed it under control and froze its assets.
Clients like the Pham sisters have since been reeling from uncertainties as they were suddenly unable to access their company’s funds.
More from NextShark: Toronto bakery declare themselves #veryAsian after customer rejections deemed them not ‘normal’
The Omsom founders wrote about how their team handled the frightening news that their bank was on the brink of collapse.
According to the Pham sisters, they began hearing about the problems plaguing SVB on March 9 while they were at the Expo West conference in Los Angeles. They found that they no longer had access to their capital when they tried to transfer their money out of the bank early morning the next day. The FDIC seized the bank later in the day.
More from NextShark: Asian American leaders remember Jan. 6 Capitol attack on its first anniversary
Terrified by the situation, they began to work by coordinating with their team, posting updates and planning their next steps. By Saturday morning, they were already strategizing alternative options for liquidity, securing short-term loans and opening new bank accounts. They also started reaching out to their vendors to work out longer payment terms.
In a moment of transparency, the co-founders placed their trust in their community by going public via an open letter about the challenges the company was facing at the time.
We may not have access to the funds in our account, beyond the $250k insured by the FDIC, for an unknown amount of time. Let us be clear: this poses a major existential threat to many small businesses. Not having access to working capital severely hampers our ability to create sellable products, manage inventory and keep the lights on.
More from NextShark: Sumo oranges: the Japanese citrus sweeping TikTok
The founders then assured their clients and followers that they are “doing everything we can to ensure that Omsom makes it through this.”
They received some positive news on Sunday when the FDIC released a statement saying that all SVB depositors will be able to access their accounts on Monday, March 13.
In an op-ed published on Fast Company, Vanessa shared that after they went public about their problems, their suppliers and vendors proactively reached out to them to “extend us new terms—like putting us on a 120-day payment schedule instead of a 30-day schedule, no questions asked—after seeing our posts.”
Had the government not acted on the issue, they were ready to act on the plans they had come up with on Friday.
Going forward, we have already opened several bank accounts and we’re putting together a plan for where to store our funds, both in terms of banking partners, but also in types of accounts. The macro-environment for startups has been tough. I think it’s very prudent as a small company to always be paying attention to the macro and understanding how that might impact your business in the near term and long term. At the same time, I think it’s really important not to get lost in that. It can be so discouraging. Right now, when we talk to other founders, everyone is breathing a sigh of relief.