On Saturday, Lauren Schulte Wang and her husband, Panpan, got in the car with their 7-month-old and 2-year-old children and drove to the bank.
They withdrew half of the money in their personal savings account, and deposited it into a brand-new account set up last Friday. It was the only way to guarantee their 30 full-time employees at The Flex Company, a Venice, California-based period health startup, would be paid on time in the aftermath of Silicon Valley Bank’s collapse.
Wang and her husband are The Flex Company’s co-founders, and serve as CEO and CFO, respectively. Their chaos began last week when SVB announced that it had sold $21 billion worth of long-term bonds at a roughly $1.8 billion loss.
The bank needed the cash to help cover withdrawals, which had increased in frequency: With venture capital funds drying up and borrowing becoming more costly, startups needed their cash on hand.
But the costly move spooked the bank’s investors, sending its stock shares plummeting and causing more startups to withdraw their cash. The simultaneous withdrawal requests exceeded SVB’s cash reserves, causing the bank to fail.
On Monday afternoon, Wang received a phone call from the Federal Deposit Insurance Corporation, telling her The Flex Company would soon gain access to its money again.
It was the first time she had cried all week. The FDIC representative cried too, Wang says.
“I feel privileged that we scraped together enough savings to be able to [cover payroll over the weekend],” Wang tells CNBC Make It. “But I don’t really know yet what the repercussions will be.”
When the bank’s stock plummeted last Thursday morning, Wang says she received an onslaught of text messages from other startup founders. She was at a conference in nearby Anaheim, California, and messaged some of her investors for advice.
They initially told her to wait it out — SVB “had a sterling reputation amongst lawyers and venture capitalists” — but their tune changed in the afternoon, she says. When Wang tried to transfer her company’s money, which she says represented 100% of its liquid capital, the bank’s website crashed.
Wang declined to disclose the amount of money in the account, but says her company brings in mid-eight figures in annual revenue and is profitable.
The Flex Company’s funds remained frozen through the weekend, which presented a problem: Each time a retailer sold one of its products, the revenue was deposited into that inaccessible SVB account, Wang says.
