As the dust raised by the insolvency of Silicon Valley Bank (SVB) continues to elicit diverse concerns amongst startups especially, there is a renewed bid to involve the US Congress in seeking a way out.
Serial entrepreneur and venture capitalist Garry Tan is less than three months into his new job as the CEO of Y Combinator (YC), one of the most famed accelerator programs in tech.
And it seems like it is been an eventful onboarding process thus far.
Along with pretty much every other corner of the startup world, YC was also affected by Silicon Valley Bank’s collapse: 30% of companies are exposed through SVB and are at risk of not being able to make payroll, he tweeted 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 is 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 credit loans.
“We are not asking for a bailout for the bank equity holders or its management; we are asking you to save innovation in the American economy,” the petition reads.
The memo asks two things: that small-business depositors at SVB will be made whole through regulators conducting a backstop, and that Congress restores “stronger regulatory oversight and capital requirements for regional banks, and any malfeasance or mismanagement on the part of SVB executives leading to this failure should be investigated.”
YC asks people to fill out a Google form “if you’d like to join us 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.”
The rapid unfolding of the SVB situation has caught many off guard, but early on, Tan told YC companies that “anytime you hear problems of solvency at a bank, and it can be deemed 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 a recently sighted internal screenshot.
Twenty-four hours after he said that Tan took to Twitter to say that “this is an extinction-level 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 little startups, tomorrow’s Google and Facebook, will be extinguished if we don’t find a fix.”
According to Tan’s memo on Saturday, it looks like he’s taking the first steps to find that fix.
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