How The Better Meat Co. Struggled To Cover Payroll After SVB Collapsed

Better Meat Co. founder and CEO Paul Shapiro received an alert on his phone Friday morning that he said made his bald spot grow faster.

Bruce Friedrich, president and founder of the Good Food Institute, was speaking at a Better Meat staff meeting about the alternative protein space when Shapiro saw the news that regulators had shut down Silicon Valley Bank, where the company had a large stake. of your assets.

Shapiro immediately realized there was a pressing problem facing the five-year-old company, which makes mycelium protein ingredients, called Rhiza, for meat alternatives. With SVB, as the California-based bank was known, closed, Better Meat would have no way of accessing the funds to process employee payroll on Monday.

After Friedrich finished his talk, Shapiro said he “created a war room” to talk to employees about what had happened and what the West Sacramento, California-based company might have to do.

After that staff meeting, Shapiro began using his personal credit card to cover immediate business expenses. Then he and co-founder Joanna Bromley, who is the company’s executive vice president of finance, spent the weekend trying to figure out next week’s financials.

He and Bromley were “essentially trying to line up bridge loans from new banks and other investor offers to help us at least make payroll,” Shapiro said.

SVB’s fall was sudden and unexpected. The bank announced last Wednesday that it lost nearly $2 billion on the 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 it down.

SVB catered to startups and technology companies, many of which saw large chunks of their assets quickly wiped out on Friday. Throughout the weekend, many companies faced the same issues as Better Meat: the immediate need to pay payroll, and then look at longer-term issues to keep business going.

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 customers who held deposits at New York-based SVB and Signature Bank, which were shut down by regulators on Sunday, “can be sure they will be protected and have access to their money starting today.” ”.

With the announcements that all deposits at SVB would be protected, Shapiro calmed down.

“I’m glad we passed this test and it didn’t need to come down to some kind of extraordinary measures,” he said. “But we were prepared for that.”

Shapiro said there was a lot of conflicting advice for companies affected by the SVB collapse. He heard some people make redundancy recommendations early on, and some well-known investors were telling companies to pull out of SVB and keep their funds in SVB.

Founded in 2018, Better Meat has deals with Hormel and Maple Leaf Foods for potential product applications and was prepared for many unexpected business issues, Shapiro said, but not this one with SVB.

“We’re not at the point of bringing in mattresses and filling them with cash yet,” Shapiro said, “but we are thinking about certain ways to manage our assets in a way that protects us from this type of potential calamity down the road.”

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James D. Brown
James D. Brown
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