Startup Kinder Beauty, which had all of its funds in Silicon Valley Bank (SVB), received help this week when Shopify wired them the money needed to make payroll.
Kinder Beauty, an online business focused on selling cruelty-free and vegan beauty boxes, exclusively conducted its banking with SVB. However, SVB collapsed last week after depositors and investors rushed to withdraw their cash due to concerns about the bank’s stability. The FDIC intervened and shut it down.
Despite assurances from federal agencies that all customers would have access to their funds starting on Monday, Kinder Beauty CEO Andrew Bernstein reported that the company could not access its money when it came time to pay employees.
According to Bernstein, while the company’s bank balance displayed accurately, every attempt to issue a payment or wire out the balance failed. The latest attempt failed “for unknown reasons” just hours before the funds were due to be distributed to team members on Friday.
In a stroke of luck, Bernstein remembered an email from Shopify COO Kaz Nejatian offering assistance to merchants facing payroll issues. Nejatian explained that Shopify would immediately wire funds to these merchants with no interest and no questions asked. The merchants could then repay Shopify when their SVB funds became available again.
Kinder Beauty reached out to Nejatian for help less than an hour before their payroll was due. Despite not being Shopify’s top customer, Bernstein described the assistance as a last-ditch effort that felt unlikely to work. However, the funds were successfully wired to Kinder Beauty just in time.
Shopify also faced challenges with its own payroll system, as it was connected to Silicon Valley Bank. Consequently, the company had to build an entirely new payroll system from scratch over the weekend.
SVB’s collapse had a significant impact on Wall Street, leading to losses in the broader markets and financial stocks.
