The Better Meat Co. founder and CEO Paul Shapiro got 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 talking to 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 kept a large portion of its assets.
Shapiro immediately realized that there was a pressing problem facing the 5-year-old company, which makes mycelium protein ingredients, called Rhiza, for meat alternatives. With California-based SVB — as the bank was known — shuttered, there would be no way for Better Meat to access 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.
Following that staff meeting, Shapiro started using his personal credit card to cover the company’s immediate expenses. Then he and fellow co-founder Joanna Bromley, who is the company’s executive vice president of finance, spent the weekend trying to figure out the next week’s finances.
He and Bromley were “essentially trying to line up bridge loans from new banks, and other offers from investors to help us at least to make payroll,” Shapiro said.
SVB’s downfall was sudden and unexpected. The bank announced last Wednesday that it lost nearly $2 billion in its sale of U.S. treasury bonds and mortgage-backed securities. On Thursday, the bank sought a buyer after an unsuccessful attempt to raise capital. On Friday, regulators shut it down.
SVB catered to startups and tech companies, many of which quickly saw a great deal of their assets vanish on Friday. Throughout the weekend, many companies grappled with the same issues as Better Meat — the immediate need to make payroll, and then a look at the longer-term issues of keeping the businesses going.
The panic subsided a bit on Sunday, when federal regulators announced they were undertaking emergency measures to make all of the bank’s depositors whole.
On Monday, President Biden said customers who had deposits at SVB and New York-based Signature Bank, which regulators shut down Sunday, “can rest assured they’ll be protected, and they’ll have access to their money as of today.”
With the announcements that all deposits at SVB would be protected, Shapiro calmed down.
“I’m glad that we passed this test and that it didn’t need to come down to some type of extraordinary measures,” he said. “But we were prepared for that.”
Shapiro said there was a lot of conflicting advice floating around to companies impacted by the SVB collapse. He heard some people making recommendations for layoffs from the beginning, and some well-known investors were telling companies to pull out of SVB as well as to keep their funds at SVB.
Founded in 2018, Better Meat has agreements 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 yet at the point to bring mattresses in and stuffing them with cash,” Shapiro said, “but we are thinking about certain ways to manage our assets in a way that will protect us from this type of potential calamity in the future.”