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."
How Wang's startup managed the SVB crisis
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.
Wang responded pragmatically. "We mobilized a kind of internal SWAT team," she says. "We created a spreadsheet of every different account we had and everything that needed to be changed and assigned different people to the work."
Over the next couple hours, company executives set up an account at the nearest JPMorgan Chase branch, and called retailers like Target and Walmart to give them a new account number for revenue deposits.
On Monday, the last of The Flex Company's 30,000-plus retail locations finally switched over to the new account. By then, Wang was already breathing more easily: She only felt relief when she and her husband decided to use their personal funds to cover payroll, she says.
"This whole thing started from an emotional place. People incited fear, and that's what created a bank run," Wang says. "The last thing we want is for employees to be ... worried about their savings accounts, whether or not they're going to be able to feed their kids, or pay their mortgage or medical bills."
A plan to navigate the aftershocks
Wang doesn't regret keeping all her company's cash in one account: Her accounting department is only two people, and it would be a "logistical nightmare" to divide incoming and outgoing cashflow between multiple banks, she says.
Of course, she doesn't want to be caught in a similar situation ever again. The Flex Company plans to open another business account at First Republic Bank, she says.
She's also trying to recoup the money she and her husband took from their savings. Moving money from a business to a personal account can be legally tricky, but Wang says her company's board and a lender responsible for the company's credit line acknowledged the "extenuating circumstances" over email, smoothing the way for an "above board" transfer.
Wang says she's confident most other startups affected by the crash will recoup their money, too — but she suspects aftershocks could hit the venture capital industry.
Startup funding in the U.S. was already shaky before SVB's failure: In the last quarter of 2022, VC dollars dropped 63% from the same period the year prior, according to a Crunchbase report from January.
And when venture capitalists tighten their purse strings, women founders and founders of color are often the first to get left in the cold, Wang says.
"Our business is going to be fine, we're profitable and growing," she notes. "The question mark in my mind is: What's going to happen with broader funding? Women and Black founders already receive less than 2% of total venture dollars."
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