Food startups describe ‘rollercoaster of emotions’ as Silicon Valley Bank collapsed

Natural Products Expo West started as a great experience for plant-based honey manufacturer MeliBio.

The company, which started in 2020, introduced its Mellody brand honey, which won an award for being one of the best vegan products launched at the mega-trade show in Anaheim, California.

CEO and co-founder Darko Mandich was interacting with people at his booth and noticed his phone kept ringing. He tried to stay focused on talking about his company to interested potential clients, analysts, investors and other visitors. But he finally stopped talking to look at his phone.

“From three different investors, I got text messages that were going around,” he said. “‘Have you seen the news?’ ‘Are they exposed to SVB?’ ‘Darko, you may have to react to this.’

“And I was like, ‘What’s going on?’” Mandich continued. “Then I checked the news and I was really surprised.”

The news was about Silicon Valley Bank, which owned about 90% of MeliBio’s funds, rapidly losing value. The bank, which mainly served technology companies and startups, announced the day before that it lost nearly $2 billion on its sale of US Treasury bonds and mortgage-backed securities. On Thursday, the bank searched for a buyer after a failed attempt to raise capital.

On Friday, regulators shut down SVB, as the California-based bank was commonly known. A silent panic began to take over the atmosphere at Expo West.

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Justin Sullivan via Getty Images

“I think this was all corporate life on a grand scale, kind of compressed into two or three days, where the roller coaster of emotions went up and down like Six Flags,” Mandich said.

Monica Bhatia, CEO and founder of Equii, which uses specially fermented grains to make high-protein flours for CPG products, was at Expo West showing off the company’s bread. All Equii funds were with SVB.

“I think the word is panic,” he said. “We were in a panic. We saw other founders panicking too, for the right reasons.”

The panic abated somewhat on Sunday, when federal regulators announced they were taking emergency action to win back all of the bank’s depositors.

On Monday, President Biden said that customers who held deposits at SVB and Signature Bank, which were shut down by regulators on Sunday, “can be confident that they will be protected and have access to their money starting today.”

Although the two founders of the company breathe a little easier, the stress is still there.

Mandich, who grew up in the former Yugoslavia, couldn’t easily say how he felt on Monday afternoon. “My answer is I don’t know,” he said. “Because I think with difficult things like this, at least for me as someone who has been through difficulties in life, I probably don’t experience the magnitude of the stress yet. [I probably will] after the mind calms down.”

Fighting to figure out what’s next

When Mandich saw what was happening with SVB, he realized that MeliBio needed to act. The company has another bank account and the millions that MeliBio had in SVB had to be transferred there.

“I knew we have a little bit of funds in other banks to cover immediate payroll,” Mandich said, “but I was very stressed.”

On Thursday, Mandich accessed a computer around 3:00 pm Pacific time, which was still during SVB’s business hours. But when he tried to log in to the bank, both his username and his password were denied.

Apparently, Mandich said, SVB’s system had undergone a platform change and he had to reset his login information. After a few frustrating hours, he initiated a wire transfer from the SVB account around 6:15 p.m.

On Friday morning, Mandich woke up to more frantic emails and text messages telling him that SVB had closed.

“I probably have yet to experience the magnitude of the stress. [I probably will] after the mind calms down.”

darko mandich

CEO and co-founder, MeliBio

As for Equii, the company I needed to figure out how to meet payroll on March 15. And then, Bhatia said, he needed to figure out how to survive, first for the rest of March and then for the next few months.

Bhatia and her team began to crunch the numbers quickly. They examined each strategy along with the things that were most pressing for the company.

“The way we thought internally was, OK, what’s the worst-case strategy and then the best-case strategy,” Bhatia said.

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James D. Brown
James D. Brown
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