As the CEO of Y Combinator, Garry Tan has been vocal about the devastating impact of Silicon Valley Bank’s collapse on startups and small businesses. Less than three months into his new role, Tan is taking immediate action to mitigate the effects of the crisis.
The SVB Situation: A Threat to Innovation
Tan tweeted that 30% of YC companies are exposed through SVB and risk being unable to make payroll due to the bank’s collapse. He called on Congress to take decisive action to save the bank, but emphasized that this is not a bailout for the bank’s equity holders or management.
The Petition: A Call to Action
Tan wrote a petition to Secretary Janet Yellen and other regulatory officials, requesting relief for small businesses, startups, and their employees who are depositors at SVB. The petition has been signed by over 600 CEOs and founders from companies like Alloy Automation, Atoms, Flutterwave, and Brex.
The Petition’s Demands
The memo asks two things:
- Make small-business depositors whole: Regulators should conduct a backstop to ensure that small businesses are made whole.
- Restore stronger regulatory oversight and capital requirements: Congress should restore stronger regulatory oversight and capital requirements for regional banks, and investigate any malfeasance or mismanagement on the part of SVB executives leading to this failure.
YC’s Call to Action
Y Combinator is asking people to fill out a Google form if they’d like to join them in imploring the US government to take action that will help stop the layoffs of 100,000+ employees, prevent a future financial crisis, and protect US competitiveness in the world.
Tan’s Advice to Startups
In an internal screenshot seen by TechCrunch, Tan advised YC companies to prioritize their interests by not exposing themselves to more than $250,000 of exposure this year. This advice was given 24 hours before he tweeted that the SVB situation is an "extinction-level event" for startups.
Update: Treasury Secretary Janet Yellen’s Response
On Sunday, Treasury secretary Janet Yellen stated that the U.S. government would not bail out Silicon Valley Bank but is concerned about depositors. However, she dismissed the idea of a bailout.
Related Stories
- Boardy AI raises $8M seed round months after closing pre-seed
- Thoras helps companies reach reliability without overspending on cloud costs
- Powerset gives founders $1 million to invest in other startups
Subscribe for the Industry’s Biggest Tech News
Get the best of TechCrunch’s coverage every weekday and Sunday. Subscribe now!
Topics: silicon valley bank, Startups, SVB, SVB 2023 crash, Venture
