“How do I do the payroll on Monday?” top managers share what they thought when the SVB failed

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How did you react on March 10, 2023 when you first heard about the collapse of the Silicon Valley bank?

During a panel discussion on the fall of the SVB Wealth’At yesterday’s San Diego Summit of the Most Powerful Women of the Next Generation, the founders and a chief financial officer shared some telling accounts.

“We had all our money with SVB and as a woman of color [running the brand], I definitely had a feeling, who’s going to support us in this?” said Vanessa Pham, co-founder and CEO of Omsom, a direct-to-consumer grocery brand. “How I do payroll on Monday was the top priority,” Pham said. “The first thing we did was talk to our investors and get their opinions.”

“I tell my LPs, technically, unless BNY Mellon goes under, we’re fine,” said Sarah Kunst, co-founder and general partner of Cleo Capital. “Meanwhile, I’m lying on the kitchen floor thinking the world has ended.”

Rothy’s CFO Dayna Quanbeck also shared her experience. “I had diversified money parked at SVB,” Quanbeck said. “And that was a heartbreaking moment because you think you’re doing the right thing by diversifying and parking the money safely.”

Rothy’s is a sustainable national footwear brand based in San Francisco that transforms discarded plastic water bottles into stylish footwear. celebrities like Katie Holmes And Megan Markle wore the mark. The company announced $1 billion Evaluation in December 2021.

Quanbeck said she was with “many other risk-takers” at her daughter’s preschool when she first heard the news of the SVB’s fall. “My experience is a little different than Vanessa’s in that I didn’t have to worry about payroll,” she said. “But the thought that that nest egg was in jeopardy was disheartening.”

“I chose the wrong safe banks”

After the SVB collapse, CFOs, even at companies not directly affected, faced difficult questions from their boards, said Russ Porter, CFO of the Institute of Management Accountants, told me recently.

Quanbeck shared her perspective during the panel discussion. “We ran a $200 million primary round last year,” she said. “I think I’m in a slightly different situation than someone who’s very early in life and has been on the runway for maybe six months. For us it meant being patient and knowing that you had done the right thing and not done anything wrong. [I had] Several calls to my board, accounts were frozen and couldn’t be moved. The irony is that we also had secure 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 there was so much fear on Friday and Saturday because no one knew if that had happened. Can we get it back? We worked so hard to improve the round to lose it that way. I figured, at least let me screw up on something else. That way you don’t want to lose money.”

“I think in Silicon Valley, or at least in San Francisco, people waited until we got the news on Sunday night,” she said. “There wasn’t really anything else you could do.”

Quanbeck joined Rothy’s in April 2019 as Chief Financial Officer. In November she assumed the additional role of COO. Prior to Rothy’s, she held various positions at Charlotte Russe, including Vice President of Finance, CFO and interim CEO. Quanbeck also spent about seven years at Merrill Lynch.

There’s one person on the board of directors of her company who “gut checks her,” Quanbeck said. “At that time, [he] “I happened to be in Singapore,” she said. “I probably called him ten times.”

“It’s important to make sure you have a point of contact that you can be transparent with to work things out,” Quanbeck said. “Because sometimes there is no clear answer and you have to decide which way to go,” she said.

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Sheryl Estrada
sheryl.estrada@fortune.com

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Big thing

From Jan. 1 to May 14, private equity and venture capital firms announced investments of $10.34 billion in 342 AI and machine learning deals worldwide, according to New Data from S&P Global Market Intelligence. That shows signs of a recovery in 2023, after the values ​​of global private equity deals in AI and machine learning companies fell to “the lowest level in Q4 2022 since at least 2020,” according to the study.

go deeper

“How midsize companies can repair damaged customer relationships,” a new report in Harvard Business Reviewoffers solutions for the tension between cost efficiency and customer proximity, which companies of the upper middle class have to understand if they want to get to the top of their branch. This is particularly important as authors Jason McDannold, managing director, and Saurabh Singh, director at AlixPartners in the private equity practice, have noted that recent years of disruption have led to a “surge in client anger”.

As companies pursue more digital solutions and customer anger mounts, they often have to accept lost customer proximity. according to the report. The authors examine how companies are failing their customers and how to reverse course. The report also explains why midsize companies need to continually explore their AI and machine learning opportunities to move from laggards to leaders.

leaderboard

Elizabeth “Beth” Eby was appointed CFO SunPower Corp. (Nasdaq: SPWR), a solar technology and energy services company, effective May 30. Eby brings over 30 years of financial strategy experience. Most recently, she was CFO of NeoPhotonics Corporation, a provider of high-speed digital optics. Previously, Eby built her career at Intel Corporation, where she held several senior positions during her 25+ year tenure, including VP of Finance and Group CFO for the Internet of Things business.

William G Monroe IV was appointed CFO Community Healthcare Trust Incorporated (NYSE: CHCT), effective June 1. Monroe was the managing director of the Healthcare Investment Banking Group at Truist Securities, Inc. in Atlanta. He joined Truist Securities, Inc. in 2011 from its predecessor SunTrust Robinson Humphrey, Inc. as Vice President. Previously, Monroe was Vice President of Private Equity Placement at Fortress Group, Inc. He began his investment banking career at JP Morgan Securities LLC in New York , where he was an Associate in the Syndicated & Leveraged Finance Group.

overheard

“Failing to break the current impasse could have slightly more negative consequences. Although the US economy is generally strong, high inflation has put strains on our financial system, including several recent bank failures. It will be even worse if the country defaults on its debt, 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 one open letter to President Joe Biden and Congress on Tuesday, calling for action to end the impending debt crisis, wealth reported.