Serial entrepreneur and Venture capitalist Garry Tan is less than three months into his new job as CEO of Y Combinator, one of technology’s most famous accelerator programs. And it looks like it’s been an eventful onboarding process so far. Like virtually every other corner of the startup world, YC was also hit by the collapse of Silicon Valley Bank: 30% of companies are exposed through SVB and risk being unable to pay payroll, he tweeted on Saturday.
The investor called on 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 more than 600 CEOs and founders of companies like Alloy Automation, Atoms, Flutterwave and Brex, whose CEO is trying to raise $1 billion this weekend to provide emergency loans.
“We are not asking for a bailout for bank stockholders or its management; we ask you to save innovation in the US economy,” the petition reads.
The memo asks two things: that small business depositors at SVB will be sane by backstop regulators, and that Congress recover from “tighter regulatory oversight and capital requirements for regional banks, and any malpractice or mismanagement on the part of SVB executives leading to this failure should be investigated.” YC is asking people to fill out a Google form “if you would join us in pleading with the US government to take action to stop the layoffs of more than 100,000 workers, prevent a future financial crisis and boost the competitiveness of protect the US in the world. ”
The rapid unfolding of the SVB situation caught many off guard, but early on Tan told YC companies that “anytime you hear solvency issues with a bank and it can be considered credible, you should take it seriously and prioritize it.” must give to your startup’s best interests by not exposing yourself to more than $250,000 in exposure this year,” according to an internal screenshot seen by businessupdates.org.
Twenty-four hours after he said that, Tan took to Twitter to say so “This is an extinction level event for startups and will set back startups and innovation by 10 years or more. BIG TECH will not care about this. They have cash elsewhere. All small startups, the Google and Facebooks of tomorrow, will be destroyed if we don’t find a solution.”
According to Tan’s memo from Saturday, it looks like he’s taking the first steps toward finding that solution.