Image credit: Garry Tan
Serial entrepreneur and venture capitalist Garry Tan is less than three months into his new job as CEO of Y Combinator, one of the most famous accelerator programs in technology. And it looks like it’s been an eventful onboarding process so far. Along with virtually every other corner of the startup world, YC was also affected by the collapse of Silicon Valley Bank: 30% of companies are exposed through SVB and risk not being able to pay salaries, he tweeted on Saturday.
The investor urged Congress to act more decisively to save SVB after it was taken over by regulators on Friday. Tan wrote a petition to Secretary Janet Yellen, Chairman Martin J. Gruenberg, Chairman Sherrod Brown and Chairman Patrick McHenry asking “for relief and attention to an immediate critical impact on small businesses, startups and their employees who are depositors at the bank.” The petition has been signed by over 600 CEOs and founders from companies including Alloy Automation, Atoms, Flutterwave and Brex, whose CEO is currently trying to raise $1 billion over the weekend to provide emergency loans.
“We are not asking for a bailout for bank shareholders or its management; we are asking you to save innovation in the American economy,” the petition reads.
The memo asks for two things: that small business depositors at SVB be made whole through regulators implementing a backstop, and that Congress restore “stronger regulatory oversight and capital requirements for regional banks and any abuse or mismanagement by SVB executives leads to this failure, should be investigated.” YC is asking people to fill out a Google form “if you want to join us in asking the US government to take action that will help stop the layoffs of 100,000+ employees, prevent a future financial crisis, and protect America’s competitiveness in the world .”
The rapid development of the SVB situation has caught many off guard, but early on, Tan told YC companies that “any time you hear solvency problems in a bank and it can be considered credible, you should take it seriously and prioritize the interests of your startup by not exposing yourself to more than $250,000 of exposure this year,” according to an internal screenshot seen by TechCrunch.
Twenty-four hours after he said that, Tan took to Twitter to say so “This is an extinction event for startups and will set startups and innovation back by 10 years or more. BIG TECH will not care about this. They have cash elsewhere. All the small startups, the Googles and Facebooks of tomorrow, will be shut down if we don’t find a solution.”
According to Tan’s memo on Saturday, he appears to be taking the first steps to find that solution.
