What was your reaction on March 10, 2023, when you first heard about Silicon Valley Bank’s collapse?
During a panel session on SVB’s fall at Fortune’s Most Powerful Women Next Gen Summit in San Diego yesterday, founders and a finance chief shared some eye-opening accounts.
“We had all of our funds with SVB, and as a woman of color [running the brand], I definitely felt, who’s going to have our back during this?” said Vanessa Pham, cofounder and CEO of Omsom, a direct-to-customer food brand. “How am I going to make payroll on Monday was the biggest priority,” Pham said. “The first thing we did was talk to our investors and get their perspective.”
“I’m telling my LPs, technically, unless BNY Mellon goes down, we’re fine,” said Sarah Kunst, cofounder and general partner at Cleo Capital. “Meanwhile, I’m like laying on my kitchen floor, thinking the world is over.”
Dayna Quanbeck, Rothy’s CFO and COO, also shared her experience. “I had diversified cash parked at SVB,” Quanbeck said. “And that was a heartbreaking moment because you think you’re doing the right thing by diversifying and parking cash to keep it safe.”
Rothy’s is a San Francisco-based, sustainable national shoe brand, which transforms discarded plastic water bottles into fashionable footwear. Celebrities like Katie Holmes and Meghan Markle have worn the brand. The company announced a $1 billion valuation in December 2021.
Quanbeck said she was at her daughter’s preschool with “lots of other venture people,” when she first heard the news of SVB’s fall. “My experience is a little different from Vanessa’s in that I didn’t have to worry about payroll,” she said. “But thinking that nest egg was at risk, was disheartening.”
‘I picked the wrong safe banks’
In the wake of SVB’s collapse, CFOs, even those at companies not directly impacted, began facing difficult questions from their boards, Russ Porter, CFO of the Institute of Management Accountants, recently told me.
Quanbeck shared her perspective during the panel discussion. “We had done a $200 million primary round last year,” she said. “I think I’m in a little bit of a different situation from somebody that’s very early stage and maybe had, you know, six months of runway. For us, it was being patient knowing you had done the right thing, you had done nothing wrong. [I had] multiple calls with my board, accounts were frozen, and you couldn’t move it. The irony is that we also had safe cash parked at First Republic. So, what you should take away is that I picked the wrong safe banks. But we had our concentration account at JPMorgan.”
She continued, “I think that Friday and Saturday, there was so much anxiety because nobody knew if this was done. Are we getting it back? We’ve worked so hard to raise the round, to lose it this way. I was like, at least let me blow it on something else. This is not the way you want to lose money.”
“I think in Silicon Valley, or at least in San Francisco, people waited it out until we got the news on Sunday night,” she said. “There was nothing else really you could do.”
Quanbeck joined Rothy’s as finance chief in April 2019. She took on the additional role as COO in November. Before Rothy’s, she served in roles at Charlotte Russe including VP of finance, CFO, and interim CEO. Quanbeck also spent about seven years at Merrill Lynch.
There is one person on her company’s board that is her “go-to gut check,” Quanbeck said. “At the time, [he] happened to be in Singapore,” she said. “I called him probably 10 times.”
It’s important to make sure you have a point person whom you can be transparent with to work things out, Quanbeck said. “Because sometimes there’s not a clear answer, and you’ve got to pro-con-pro your path forward,” she said.
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"Failure to resolve the current impasse could easily have more negative consequences. Although the American economy is generally strong, high inflation has created stresses in our financial system, including several recent bank failures. Much worse will occur if the nation defaults on our debt obligations, which would weaken our position in the world financial system."
—A group of more than 140 CEOs and Wall Street titans—including Pfizer CEO Albert Bourla, Macy’s CEO Jeff Gennette, Morgan Stanley CEO James Gorman, Nasdaq CEO Adena Friedman, Goldman Sachs CEO David Solomon—wrote in an open letter to President Joe Biden and Congress on Tuesday, calling for action to end the pending debt crisis, Fortune reported.
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