Silicon Valley Bank, an institution with assets and liabilities totaling over $200 billion, crashed over the weekend. Although the bank mostly catered to venture capitalist firms, many food and beverage startups and small brands also felt the ripple effects of its fall, reports Food & Wine.
Considered one of the biggest bank failures in U.S. history, the collapse was caused by a “bank run,” when many bank users withdraw their deposits at the same time over fears of a bank’s failure. The Biden administration has since stepped in, saying they will cover money the uninsured money.
“It’s a common misconception that what happened with SVB only poses a threat to big tech,” Vanessa Pham, CEO and co-founder of Omsom, tells Food & Wine.
Omsom, a brand making all-in-one Asian sauce packets, is one of the food companies affected. It has been updating its customer base via Instagram, providing transparency as to what this crash means to it.
“Put simply, consumer packaged goods businesses need access to their funds to operate, and having the rug ripped from under you is hugely disruptive,” said Pham. “Business owners trust that the hard-earned money they have in the bank will be there every day. When that changes overnight, it creates a massive disruption operationally, financially, and psychologically—especially for small teams like ours.”
Silicon Valley Bank became a dependable lender for tech startups that appeared too risky an investment for larger financial institutions, which is why so many food companies decided to bank with them. Full Story
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