Over the weekend, founder and CEO of Minneapolis-based Soona Studios, Liz Giorgi, shared her experience with the Silicon Valley Bank collapse on Twitter.
Like many of the businesses affected, Soona is woman owned. Giorgi says traditional banks have underfunded women. She talked about this and more on All Things Considered with guest host Catharine Richert.
Over the weekend you wrote on Twitter that the fall of SVB is a crisis for female founders. Why is that?
Many folks don't realize that women founders specifically are underbanked. In the United States, the World Economic Forum suggests that there's about $300 billion worth of small businesses run by women across this country that have not been able to get proper access to financial instruments that help every business run.
And this is because a lot of the rules that exist around traditional banking institutions also create really great ways for subtle discrimination against female founders. Just to give you a perfect example of my own story, despite having run a successful bootstrap business for seven years, I approached more than 20 banks and could not receive those services.
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In large part this was because it just doesn't look like the type of business that they want to invest in, that they want to take a chance on. And that's where a bank like Silicon Valley Bank really came in. They looked at female founders and said, there's an opportunity here for us to help an underbanked population.
Can you just expand a little bit on why you think that this is a gender-based decision?
They oftentimes don't take into consideration the business plan and the business founders. You oftentimes just go into a risk profile box, they have a list of questions that they're going to ask you, those questions are really around your earning potential in the world, alternative strategies you might have for getting money, what you own.
And let's be honest, for most women who are leaving a traditional job and entering into the world of being a founder, they likely were paid less than their male counterparts. So they may have less money saved, they likely did not have as much access to things like purchasing their first home on their own, although that is changing.
Many women don't have as much ownership and things that could be repossessed in these transactions. And so yes, from a risk basis, it's really easy to understand when you ask a series of questions, why women might be quote, unquote, less attractive to a bank.
But the reality is, we're not taking into consideration things like women are getting more college degrees than ever, women are willing and oftentimes becoming the primary breadwinner in many American families.
In fact, the IRS is reporting that for the first time ever, there's parity for women being the primary breadwinner and families. And so the banking system simply hasn't kept up with the economic role that women are playing. Because of that, they don't ask the right questions, and they don't have the right risk assessment for how women are going to perform as business owners.
Soona Studios is a virtual photography and video studio geared for e-commerce, can you tell us a little bit more about your experience getting your business off the ground and how you ended up turning to SVP?
In 2019, my co-founder, Hayley Anderson, and I really had a very simple vision — every single thing we buy on the internet has a photo and somebody has to take those photos, but the way that we do that is largely not enabled by technology.
And so we really envisioned a universe where a brand could plan a photoshoot, have a photoshoot and get those assets delivered entirely online. Of course, when we had that vision, we knew that we needed to build a tremendous amount of software.
We applied for an accelerator program called TechStars. TechStars is one of the largest accelerators for technology startups in the world and they invited us to meet with Silicon Valley Bank as a possible banking option. We met with a local representative and of course, the first thing they said is we would love to help you.
Over time, one of the amazing things about having a technology startup in modern days is that things go really fast. So soon, we had exceptional growth. We've had over $15 million of revenue in just two and a half years. And we're really grateful for that success but that success would not have been possible if we didn't have a banking partner that allowed us to actually grow as quickly as the business was growing.
What does its collapse mean for your company? And what steps are you taking right now to blunt that fallout?
Certainly, we're very pleased by the decision of the Federal Reserve to make depositors whole, we're happy to say that we have access to all our funds. We're going to be able to make payroll this week, and we're gonna be able to continue our business operations.
But I think the biggest concern and the concern that we are currently navigating as a leadership team, is where are we going to take our banking relationship moving forward and no buyer stepping forward — that means we have to now go find a banking relationship with a new partner. And while many banks were showing up this weekend offering to open checking accounts, I think the big unanswered question for us is who is going to allow us to continue down the growth path that we're on.
Are any of these traditional financial institutions going to meet that need? Are they going to think differently about perhaps discriminatory policies that they may not realize are actually discriminatory? And are they going to step forward for female founders, and honestly, non-white founders.
When you look at the data, Silicon Valley Bank actually put $17.5 million into Black and Latinx founders last year to help support that underbanked population as well, this isn't just a female founder issue. This is basically an issue for any founder who is not a white man in America.
So given your personal experience, finding a bank to back your business, what would you want to see happening around banking and financial regulation in general, moving forward?
I think there's a really simple thing, which is to say, if there's $300 billion worth of business that's unbanked in this country, and 50 percent of businesses started in this country are founded by women, we can just look and see — are we giving the same financial vehicles to female founders at the same rate, as we're giving them to male founders?
Do the math, see if you're doing the work, and really, honestly, if you're not doing the work, put a process in place to remove that discriminatory behavior.
And the final thing I'll say, which really just blows my mind every single time is that when you look at the data, quite bluntly, women-owned businesses are more likely to survive.
They're more likely to be profitable, and they're more likely to grow sustainably year over year. When you compare those data points alone, it's baffling to me that there aren't more bets made on women-owned businesses.
To hear the full conversation, click play on the audio player above.