From ‘huge shock’ to ‘intense relief’: How one medtech startup weathered the collapse of SVB

Osso VR Founder and CEO Dr. Justin Barad was at the Venetian convention center in Las Vegas last Thursday for the American Academy of Orthopedic Surgeons’ annual conference, when one of the company’s investors told him about a potential problem with Silicon Valley Bank.

The 39-year old bank, where, like many startups, Barad’s company held all of its assets, was collapsing. San Francisco-based Osso VR, which makes virtual reality training tools for manufacturers of orthopedic devices and for medical residency programs, needed to find a way to pay its 180 employees. 

“This is obviously a huge shock and a very scary thing to go through — something that nobody expected,” Barad said in an interview.

The CEO said the reaction to the news at the orthopedic conference was more muted than the loud buzz, signs of panic and incessant smart-phone checks that reports say shook the startup-heavy SXSW conference in Austin, Texas, the same day.

“You weren’t seeing that here,” Barad said. “Within the [medical] device ecosystem, it’s probably limited to these mid-size startups like us — health technology companies that tend to bank with SVB, especially anything in San Francisco or the Bay Area.”

SVB’s collapse was as swift as it was unexpected, and it left the many startups that had banked with it scrambling for support. On March 8, SVB announced that it lost nearly $2 billion selling U.S. treasury bonds and mortgage-backed securities. The next day, following an unsuccessful attempt to raise capital, the bank reportedly sought a buyer. On March 10, California regulators shut it down.

Preparing for the worst

Barad said his initial reaction to the news was concern and uncertainty over what to do next.

“There was a variety of recommendations from our board investors and advisors: everything from ‘just don’t do anything, you’re just going to make it worse’ to ‘pull your money out immediately,’” Barad said.

Ultimately, the company made the decision to withdraw its deposits from SVB, but got “caught up in the freeze,” uncertain how it would make the next week’s payroll. 

Barad said experience working through past crises, and to an extent, his training as an orthopedic surgeon, helped him manage through the turmoil. Knowing how to deliver bad news and deal with difficult situations helped him respond in the moment. 

He also credited the company’s finance team, led by CFO Josh Willeford, who “didn’t sleep for three days, [left] no stone unturned, scratching and clawing to make sure everyone was safe.”

Original Article: (https://www.medtechdive.com/news/medtech-startup-svb-shutdown-osso-vr-SIVB/645158/)