On Small Businesses
And how CPG brand owners were forced to pivot during the SVB Collapse.
Today, we’re side-stepping into my other world for a moment. Some of you may know that my full-time job is co-owner of Four Course Media, a product photography agency focused on the food and beverage consumer packaged goods (CPG) industry. As a part of my role there, I keep close tabs on the world of fundraising, venture capital, and finances as it relates to the kinds of small businesses that make up our client base.
Back in March, right after the SVB collapse, I noticed that there weren’t many narratives covering the impact to these types of business. Knowing that many of my colleagues and friends in the industry had banked with SVB, I was sort of surprised to see them being left out of the coverage.
When a friend of mine who I met at Cherry Bombe’s annual conference last year posted about being affected by the collapse, I reached out to her and we spoke about how she was navigating it and her takeaways. It was a conversation that has stuck with me, and I hope you get as much out of it as I did, even a few months after the fact.
Sachi Singh is the founder of Rootless, a sustainability-focused company with a line of seaweed bites. She is a force of nature, as you’ll soon read, and I can’t wait to see where she takes Rootless.
This conversation has been condensed and edited for clarity.
Laura Scherb: So first off, can you just walk me through? I know you were at both Expo West and South by Southwest when all this is going down, right?
Sachi Singh: Yep. Okay, so let's see, I got to Expo Wednesday morning. On Thursday evening, I started to hear all kinds of rumors that something was happening. So I did a little bit of, you know, online digging, and honestly, I mean…well, now, I feel like I got a crash course course on the American banking system over the weekend. But at that point in my kind of naive brain, I thought there's no way that this is gonna affect depositors. Or that there was going to be a run on the bank. So I wasn't super concerned about having any kind of, you know, risks affect the business.
We also had a supply chain issue during Expo that we were navigating, so I was handling that with my colleague super early on Friday morning and started to get some of this, you know, the panic started to set in. Basically, investors started to pull their money out. So I rushed home to talk to the FDIC and to get in touch with folks there just to sort of, like, be on the record and establish that we are one of the small businesses affected and try and get expedited access to that $250K that they promised everyone. And this was all slightly stressful too because I had a panel later that day. So I was just trying to kind of navigate it all.
LS: Geez. What a nightmare. Okay, so as all of this was unfolding, you were at these two places where there happened to be so many other food and beverage CPG founders who might have been going through the same thing. Was there any, you know, communication about this with other brands? Or do you feel like you were just really kind of dealing with this in a bubble?
SS: So, I mean, I will admit, I kind of went into coping mechanism mode for myself. I mean, it was an extreme crisis, right? The interesting thing was that the banking portal was still accessible online. So I tried to transfer out a chunk of money into my personal account. And obviously, the processing didn't go through. My colleague, Elizabeth, who's our Director of Marketing, she was on hold at the FDIC — did not get through them, obviously — but she was on hold with them for three-and-a-half hours. Which is crazy.
Because the other scary thing was, you know, all we knew was what we were reading. And we knew that we had access to about $250K, but what happens to the rest? The money was uninsured, right? So it was a question of: are we even going to be able to access any of our capital?
But I also had to prep for my panel. And also in the middle of this, I had lost my voice. It's been crazy. So I went back to my hotel room and just, like, sheltered in place, if you will. I didn’t want to talk to anyone, I just needed to triage. I needed to make sure my team was okay. I mean, that was sort of the primary objective, and I just couldn't be around other people. So yeah, went back home, tried to get the money out, couldn’t, prepped for my panel, did my panel, de-compartmentalizing everything. And then, over the course of the weekend, I think that's when rumors started coming through. And, you know, I started talking with founders. And I think that's when some of the spin and panic set in if I’m being super honest.
LS: Okay, okay. Yeah, I mean, it was kind of interesting over the weekend, because you were hearing so many things about all these huge tech companies and VC firms that were losing a fortune, but I only saw a couple of people, including you, in the food and beverage world, posting about how this is affecting them. But I kind of knew in the back of my head that there had to be so many other people who were like dealing with this and figuring it out just because they've taken so much venture money.
SS: Exactly. Yeah.
LS: So, you know, I guess my question to you is, like, how is this going to affect you as a business moving forward, as you're talking to venture firms about funding, as you're thinking about, you know, setting up your business or financial success in the future? Obviously, there's so much out of your control, but what, as a food and beverage founder, what can you be doing to protect yourself from this?
SS: I mean, I think for better or for worse, these are truly unprecedented times. It was, I think, the second largest banking collapse in the country's history. And I think it was also one of the quickest, right? So I think moving forward, very tactically, we're gonna start out with at least two different bank accounts. I think we're definitely not going to bank with venture banks in the future. So go to ones that are more established, you know, less risky banks to store the majority of our capital, and then also, you know, a smaller regional banks that we have some funds in. So I think that's point number one.
Point number two is…I don't know, I think as a company, it sort of reinforces the kind of growth that we want to be committing to, which is responsible and sustainable at a pace that feels right.
Because we're super focused on sustainable sourcing, you know? We physically cannot grow exponentially until we build stable, secure, sustainable, responsible supply chains. So I’m hoping that this is sort of a course correction in the way that we're thinking about CPGs, food and bev, and food tech. I don't know if that's going to be the case. I mean, there was such a rapid response from the government — which I am so grateful for — but I do hope that this is a wake up call for the industry that we're not tech companies, right?
Like, food companies can't scale in a way that tech companies can. So I’m just hoping that all of us, founder or staff, VCs, angels, consumers, we're all just having a different conversation about what responsible growth looks like. So if anything, it’s actually making me wonder — like, it's validating and it’s kind of making me want to double down on the plans that we already have.
LS: Well, that's awesome.
SS: I'm kind of curious to see how this kind of shakes out, but I think the very immediate reality is that fundraising is just going to be harder. It was already hard, you know, we definitely did see that valuations were down, capital was harder to access, but I think those purse strings are going to get tighter.
LS: Yeah, I mean, I've been reading and I'm sure you've been reading as well, that it's getting harder in this economy to raise capital. And I just, you know, when I saw the news start to come out last week, it was just a punch to the gut.
SS: Totally. And, you know, this was a venture-friendly startup bank. So now what? What is the kind of financial infrastructure and systems that are going to fill this gap in a way that feels comfortable for the VCs and the people giving out the capital and small businesses?
LS: I mean, it's a really interesting question to think about. And I just so appreciate you sharing your perspective on it. I know that it's different for every business, depending on where they are. But it's a real question moving forward.
SS: Let me just add a little message of hope. Like, I do think that, you know, I'm so inspired by the message that Omsom put out, you know? We're still baby company; we're still growing. But our community rallied around us, you know? Like, we did actually a pretty big day in sales on…whenever I posted that LinkedIn article, Sunday, I guess. Because institutions may fail you, but people don’t. They actually want to see you win, especially if you've created something of value. So that is, in the middle of all of this, which is just an emotional roller coaster, just really heartening to see that, like, people want you to win, you know?
LS: Yeah, you know, it was really encouraging to even just see people posting and saying “Oh, I just bought this product from this brand because they're going through that.” And I love that you're, you know, seeing the hope and the goodness in this because it is really incredible, especially in today's day and age, with brand loyalty, how people will show up for the brands that they love.
SS: I think the one thing that I also just wanted to want to stress is that when shit hit the fan, and the news broke, like, that was our whole world. I ran into some founders at the airport and that was the only thing that was on my mind, the only thing that we could talk about as a community. And I realized how few people outside of our little like CPG bubble knew what was going on and knew the impact that it had on small business.
So I think really highlighting that this wasn't just a Silicon Valley problem. This impacted small businesses. It was an existential crisis to what I really do believe is the lifeblood of this economy. So it was actually kind of surprising to me how that narrative just wasn't being talked about enough.
Because when I put my post up, all of my people, my friends, my family, they were like, “Oh, we actually didn’t realize that you were going to be impacted,” you know? And I was like, “Yeah, that makes total sense.” Because there hasn't been any reporting. There hasn't been kind of any mainstream public-facing media that is talking about that.
LS: I'm really glad to hear you say that. Because over the weekend, just having seen your posts and Omsom’s post, I was like, I can't believe nobody else is talking about this. With a company, like Meta or Snapchat or Roku, there is so much built up around them to protect them from failing or from going completely insolvent. And with a small company, this is so much more impactful for you.
SS: Yeah, I mean, it's a double-edged sword. Because let's assume that we didn't have access to more than that $250K. As of Monday, actually, we will be a team of four. I actually paid payroll, like, out of my own bank account. And I was like, I can do this for one cycle, but I can’t do this the next cycle. But that $250K would be able to actually float us for a couple of months.
But companies who were larger, and founders who had teams of 30 to 50 people — that $250K would have disappeared in a second, you know? And I think that also the impending deadline of March 15, if that hadn't come up, I genuinely don't think that we would have seen the rapid response that we did because there was an existential threat to livelihood.
You know, paying my team was always literally priority number one. So we wouldn't have not done that. Because you can't tell a team of 30, 40, 50 people that you’re going to defer payroll by two weeks, right? That’s not doable. And, you know, we’re direct to consumer. A lot of the companies that are actually larger would have been would have been impacted in a very different way.
LS: Yeah, that's a great point. Did you say that you paid payroll the following Monday out of your own bank account?
SS: Yeah, I did.
LS: Wow.
SS: Because I think it was, it was what, like, March 14, or something? We do payroll March 15. So yeah.
LS: Wow, that's so admirable of you, I have so much respect for you.
SS: You just got to do what you got to do.
LS: Well, I mean, that is just such a such a scrappy startup thing of you to say, but you know, that's really speaks volumes to the way you're running your business. Thank you so much for that and for the time.
SS: My pleasure, and thank you for being here giving us the opportunity to share.
LS: Amazing, you are the best. I really appreciate it. And truly this is incredible. So thank you.
Thanks for sticking with me for another long-ish but fascinating conversation. Coming up: a subscriber-only recipe for cherry crisp! Cookbook reviews! A long and passionate ode to dates! Your guide to farmers’ market shopping!