A Silicon Valley Bank worker talks to people waiting in line outside the bank’s office on March 13, 2023 in Santa Clara, California.

Justin Sullivan | Getty Images

After turning on CNBC last Thursday to see SVB’s share price is hammered and venture news that urges start-ups to hit the exits, EarthOptics CEO Lars Dyrud acted quickly. At 4 p.m. ET, he requested a wire transfer of $25 million from Silicon Valley Bank, representing roughly 90% of his company’s deposits.

It was too late. EarthOptics did not receive a response on Thursday, and the following day SVB received seized by regulators in the second largest bank failure in US history. Dyrud had no idea when he would be able to access his company’s deposits, since the Federal Deposit Insurance Corporation only guarantees $250,000 per customer.

Like thousands of SVB customers, Dyrud was almost worried missing payroll for March 15, which was only a few days away. He spent all of Friday and the weekend devising an emergency plan that revolved around a $1 million loan from three board members, including from an investor who would link money to BambooHRthe company’s payroll processor.

“We started planning to be cashless for nine months,” Dyrud said in an interview Tuesday. “We had four plans in place in order of priority in case something went wrong.”

Dyrud sent a Slack message to his employees late last week updating them on the situation.

“We expect to ultimately be whole but must prepare for alternative access to cash while this is sorted out,” Dyrud wrote in the memo, which he shared with CNBC.

SVB’s rapid collapse sent shock waves across Silicon Valley as the failure of the pre-eminent bank for venture-backed startups threatened to indefinitely freeze access to the money companies need to pay their staff, suppliers and partners, while destabilizing the banking system.

According to California regulators, investors and depositors pulled in $42 billion from SVB late Thursday after the bank said it sold $21 billion worth of securities at a loss and sought to raise additional capital. Dyrud feared at the time that it would be the fastest banking round the country had ever seen because of the nature of the clientele and how quickly information travels.

On Friday afternoon, Dyrud went with his administrative manager and controller to a venue Wells Fargo branch in Arlington, Virginia, to open a new account. It was the only bank to open a same-day account for his 75-person startup, whose technology is used by agribusinesses and farmers to measure the health of their soil.

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That evening, Dyrud held a 45-minute long board meeting Zoom to make sure everyone was aware of the game plan and the loan arrangement, which was structured as an unsecured promissory note. Dyrud said he was on the phone 12 hours a day, starting Thursday.

Four days of panic finally ended late Sunday, when regulators announced a plan to stop deposits and ensure all customers would be able to collect their money starting Monday.

Earlier this week, EarthOptics had its money safely in Wells Fargo and paid back two investors for the loans. Dyrud said he was able to cancel the loan from the third investor before the money was sent.

“It was the most traded two-day loan ever,” Dyrud said.

Updating Google

Otter.ai founder and CEO Sam Liang spent Monday driving to SVB’s Silicon Valley branches to try to retrieve millions of dollars of his company’s cash.

Liang said the company, whose software transcribes audio from meetings and interviews, tried to initiate a transfer Thursday night, but it never went through.

“We were pretty worried over the weekend, watching the news all the time,” Liang said in an interview Monday from the parking lot of the SVB branch in Menlo Park, Calif. “I checked Google like 20 times an hour, saw (Treasury Secretary Janet) Yellen talking about not bailing out Silicon Valley Bank.”

He woke up at 7 a.m. on Monday and tried to log into his account, but kept getting error messages because the system was overloaded. That’s when he got into his car.

“I thought, OK, I’ll just go to an office physically,” Liang said. “I went to the Palo Alto office first. There was a line there, but a guy said they couldn’t do much. I drove from the Palo Alto office to the Menlo Park office.” At that branch, Liang said he waited between 90 minutes and two hours for help.

Liang said he’s lucky that a few months earlier, Otter, which has about 100 employees, had moved the majority of its money to another bank, though he didn’t say why. Still, he said the company had a lot of money in SVB — in the millions of dollars, but less than $10 million — which would represent “a huge loss” if it disappeared.

“We have to make sure the wages and everything work,” Liang said.

He was unable to get hold of all his money immediately, although he is confident that it is all available under the plan that regulators announced on Sunday.

Silicon Valley Bank customers listen as FDIC representatives, left, speak with them before the opening of a branch at SVB’s headquarters in Santa Clara, California on March 13, 2023.

Noah Berger | AFP | Getty Images

“I just got a cashier’s check,” he said. “They couldn’t give us everything so they gave us a percentage of the money. We’ll have to do it again probably later today.”

While customers were planning their next move, SVB’s newly appointed leader sent out one appeal for customers to come home.

Tim Mayopoulos, who was named by the FDIC as CEO of the bank, now called Silicon Valley Bridge Bank, emailed customers to say SVB is open for business and ready to accept and hold deposits.

“The most important thing you can do to support the future of this institution is to help us rebuild our deposit base, both by making deposits with Silicon Valley Bridge Bank and by transferring back deposits made in recent days,” Mayopoulos wrote in a press release. . email that was also posted on the company’s website.

Liang said Otter opened accounts at two major banks over the weekend and will “distribute funds across multiple banks.”

Dyrud has a similar plan. Currently, all of EarthOptics’ cash is parked at Wells Fargo, but he said the company will soon spread some of it to JPMorgan Chase and another bank.

“It just makes sense,” Dyrud said. “We wouldn’t have been in this position if we’d even had a second account.”

Dyrud traveled from Washington DC, where he is based, to San Francisco for a conference this week. Dyrud said he had never done business with SVB before running EarthOptics, but he has spoken with people at the event who have much longer and deeper ties to the bank through venture debt arrangements and other types of financing.

“There are some who are more loyal than I,” he said.

Like buying Taylor Swift tickets

Will Glaser would place himself in the more loyal category, although he had an equally chaotic four days trying to shore up his company’s liquidity.

Glaser is the founder and CEO of Grabango, a developer of checkout-free shopping technology. A longtime Bay Area technologist, he co-founded Pandora in 2000.

Grabango was more limited than some other companies in how it could react to the SVB crisis due to the terms of the agreement with the bank. Grabango is relying on the bank for a risky loan, which includes a provision prohibiting the company from doing much banking with other institutions.

That exclusivity created a huge headache for Glaser over the weekend. He wasn’t sure how he would be able to raise the funds needed to make it through March 15 without violating his company’s alliance with SVB. And no one picked up the phone at the bank to tell him it was OK, or alternatively to help him get an extra short-term loan from SVB.

“I definitely struggled with my team and investors to line up options,” Glaser said. “There was never a moment when I thought we were going to lose our deposits, but it was definitely a liquidity crunch. Would we have the money and time to do payroll?”

Glaser said he communicated throughout the weekend with his investors and attorneys from Orrick, Herrington & Sutcliffe. They discussed all possible contingencies and tried to determine if there were any emergency funding options to pay the company’s 110 employees without potentially violating the terms of its SVB contract. That could have meant “I funded the payroll personally” or “one of our investors leaned in,” he said.

In the end, Glaser was relieved to have to make a tough decision. All of Grabango’s cash in the bank, which amounts to double-digit millions, would be available on Monday, in time for the company to transfer funds to its payment service provider and meet payroll on Wednesday.

Not that things went smoothly on Monday, as Glaser was among the many SVB customers trying to get everything up and running again. The bank’s technical systems were not prepared for the attack.

“I’m on SVB’s website and I felt a bit like a teenager trying to buy Taylor Swift TicketsGlaser said,

Despite the madness that stretched from Thursday to Monday, Glaser is now more confident than ever about his banking situation. Before the run at SVB, Grabango’s deposits were not protected. Now they are, under government measures to protect depositors, whether they are insured or uninsured.

Grabango even drew down an additional line of credit with SVB this week, giving the company more access to capital for its hardware business.

“I think the world is going to diversify more going forward,” Glaser said. “But for now, as long as Silicon Valley Bridge Bank is 100% federally guaranteed, there’s no need to diversify. There’s no safer place to be.”

— CNBC’s Rebecca Smith contributed to this report

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