Without access to 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 spices company.
“I spent most of Friday afternoon writing to all of our creditors and saying, ‘Hey, I know we owe you money now, but I hope everything works out over the weekend,’” he said. “If not, have mercy on us.”
Early Monday morning, Vocino was able to successfully log into Silicon Valley Bank’s website and begin the process of closing their accounts. He is transferring his money to City National Bank.
“I would just feel more comfortable somewhere else,” said the Solvang resident.
Many other small business owners felt the same way after the Santa Clara, California, bank was seized by the Federal Deposit Insurance Corporation on Friday, followed by the takeover of Signature Bank of New York on Sunday by regulators. state.
Monday became a day of massive money movements and account closures after what one winemaker called “crisis purgatory” over the weekend, with account holders panicking that they would not be able to access their money. easily or quickly. Customers logged on to Silicon Valley Bank’s website in droves, while others rushed to branches of other vulnerable financial institutions.
The financial fight came despite assurances from President Biden, who told Americans that actions by the US Treasury, the Federal Reserve Bank and the FDIC will ensure that “the banking system is safe. Your deposits will be there when you need them”.
“I thought my business might be over and I was angry,” said Anthony Coombs, chief executive of Santa Monica underwear company Splendies. He called the previous 48 hours “absolute chaos” and said he transferred 80% of his company’s funds from Silicon Valley Bank.
“This was not making a stupid investment; this was not bad planning: it was company money in a bank where it is supposed to be safe,” he said.
Before Coombs knew if the transfer had gone through on Monday, he counted his savings, prepared to use it to pay payroll for his 13 employees, and contacted vendors, who told him payments due within the next two weeks could be extended to the next two months.
Many startup founders spent the weekend racing to figure out ways to make ends meet for their businesses.
Lauren Wang, who runs sustainable period products company Flex, was unable to access her company’s money at Silicon Valley Bank on Friday. The next day, she drove to a Chase bank in Calabasas to open a business account and wired half of her family’s liquid savings to pay payroll for Flex’s 30 employees by Monday.
It was “taking measures first to protect our employees and solving it 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, the crash served as a lesson in diversification. King Alandy Dy, founder of San Francisco-based AI logistics company Expedock, spent Friday lining up at Chase and Wells Fargo locations in Piedmont to open new accounts, along with several other startup owners who did the same. .
On Monday, he logged into Silicon Valley Bank and transferred his money. “I’m just trying to get a decent spread,” he said of his new banking strategy.
Tegan Passalacqua of Sandlands Vineyards in Napa learned about last week’s bankruptcy from her boss, who “called me and said, ‘I hope you don’t have any money in Silicon Valley Bank,’ and I said, ‘I have. all my money in Silicon Valley Bank.’”
Passalacqua has been 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 manufacturers, and shipping services.
“I didn’t have a lot of wiggle room on my balance sheet,” he said. “There are a lot of people who were like, ‘It’s going to be fine at the end of the day,’ but you don’t know until you have access to it.”
Things were generally quiet on Monday after last week’s frenzy of bank runs, but there were still hiccups.
Shortly before noon, Isa Watson, founder of social media startup Squad, said the company still couldn’t access her Silicon Valley Bank account and kept getting error messages.
“It’s definitely another day of fighting,” he said.
His company is moving to Chase and he hoped to have those new accounts set up by the end of the day. But until his Silicon Valley Bank funds are accessible, Watson is keeping an eye on Squad’s spending. He began receiving default notices on the company’s Silicon Valley Bank credit cards on Saturday and has been paying the bills with his personal credit cards.
“I run a software company, we’re in the consumer social space, we have a technology app and an audio app,” he said. “I can’t get my backend database to shut down because it wasn’t paid for.”
Watson said the sudden collapse of Silicon Valley Bank, which served more than half of all venture-backed tech startups in the country, had left the founders “rethinking how we approach banking.”
Going forward, startups will have to take “more of a front-row seat and strategy of how we do banking,” he said, “which is not something we thought about as intentionally before.”
The fallout from Silicon Valley Bank has spread to other financial institutions, with First Republic Bank shares plunging 62% on Monday despite assurances from the San Francisco-based bank that funding from the Federal Reserve and JPMorgan Chase had shored up his finances.
A First Republic branch in Studio City was packed with customers Monday. One said that he had arrived at 9:30 am to withdraw $340,000 and transfer 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 the money. Now they tell me all three. I’m a little 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 that he had decided to withdraw a $200,000 certificate of deposit to meet the FDIC-insured limit of $250,000. He said that he was concerned about the bank’s failure and that he had decided to pay a $4,000 penalty for withdrawing the CD early.
As customers scrambled to move their money on Monday, vendors watching from the outside said they hoped the turmoil didn’t spill over into their businesses.
In addition to being a major bank for tech startups, Silicon Valley Bank was also heavily involved in the wine industry. For days, grape growers have been trying to find out which of their winery clients used Silicon Valley Bank, fearing they won’t get paid on time, said Jennifer Thomson, owner of Thomson Vineyards, a contract grower in Napa.
“The first thing that the technicians who own a winery do not pay is the grower,” he said.
Times staff writers Terry Castleman, Daniel Miller, Russ Mitchell and Melody Petersen contributed to this report.