Asian pantry item company Omsom was founded in 2020 and has used Silicon Valley Bank as a partner for most of its existence. On Friday, after a bank run on its deposits, the bank collapsed and sister cofounders Vanessa and Kim Pham were unable to access the company’s funds. On Saturday, they wrote an email to customers explaining their company’s situation and encouraging them to purchase items from Omsom and other small businesses like theirs. Eventually, on Sunday, the FDIC announced that depositors at SVB would be protected and have access to all of their money. Here, Vanessa Pham talks about how her company weathered the storm over the chaotic weekend.
On why they chose SVB
Omsom is an early-stage brand—we started in May 2020. In the startup ecosystem, SVB was a trusted partner to so many startups. Many of our founder friends, advisers, and mentors recommended working with the bank. They also ran a lot of community events and made a lot of introductions in the community. They also offer a good number of services and products that we thought we might need in the next couple of years. They had products like term loans that meet the needs of startups. They were written for that type of growth trajectory.
On how the crisis unfolded
It all happened within 24 hours. At first, on Thursday, there were rumors with a couple of people in the know passing around a link to some information. Then there was a meaningful share of VCs and founders that started scrambling. Then on Friday, the FDIC actually seized SVB. By the end of the day Friday, we realized we didn’t have access to our funds and we had to talk to our partners, suppliers, and investors.
For a business like ours—a food consumer-packaged-goods business—having access to working capital is paramount to keeping the business operating. Literally everything can be impacted when we don’t have access to our funds. We have a small team of fewer than 10 people, so [my cofounder] Kim and I were committed to ensuring we could make payroll. That was our No. 1 priority. But outside of that, we’re actively investing in growing our inventory, and growing our business, so over the weekend, we had to think about potential solutions to help us keep that going.
As soon as we had some clarity on Friday, we spoke with our team and suppliers, and we kept updating them through the weekend. We posted on Instagram about our troubles with the bank, and also wrote a newsletter to customers telling them what we were going through [and encouraging them to purchase our products to help the business]. We wanted to be vulnerable with our customers and our community. A lot of our suppliers and vendors actually proactively reached out to us 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.
If the government had not intervened, we would be working on solutions we started coming up with when the news hit on Friday. Scott Norton, one of the cofounders of Sir Kensington’s, is one of our investors and gave us a lot of good advice, along with some other mentors and advisers. Then we needed to come up with short-term liquidity solutions. We started talking to investors to see if they might give us short-term loans because we didn’t know how long it would take for us to access our funds, or if we would ever get access to them. We wanted a runway to weather the storm.
On what happens next
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.
—As told to Yasmin Gagne
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