Image credits: Gary Tan
Serial entrepreneur and venture capitalist Gary Tan spent less than three months in his new job as CEO of Y Combinator, one of the tech industry’s most popular accelerator programs. It seems to have been an eventful setup thus far. Along with every other corner of the startup world, YC has also been affected by the Silicon Valley bank meltdown: 30% of companies are exposed through SVB and are at risk of not being able to do payroll, He tweeted on Saturday.
The investor called on Congress to act more decisively to save SVB after it was seized by regulators on Friday. Tan Books Wide To Secretary Janet Yellen, and Chairman Martin J. Gruenberg, Chairman of the Board Sherrod Brown, and Chairman of the Board Patrick McHenry asking for “relief and concern for the immediate significant impact on small businesses, start-ups and their employees in the bank.” The petition was signed by more than 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 for emergency credit.
We are not asking for a bailout of the shareholders or management of the banks; We ask you to save innovation in the American economy,” the petition reads.
The memo demands two things: that SVB depositors of small businesses be made whole by regulators making a backseat, that Congress reinstate “stronger regulatory oversight and capital requirements for regional banks, and any wrongdoing or mismanagement on the part of SVB executives that results in this Failure must be investigated.” YC is asking people to fill out a Google form “if you’d like to join us in appealing to the US government to take action that will help stop more than 100,000 layoffs, prevent a future financial crisis, and protect US competitiveness in the world.”
The quick discovery of the SVB situation raised many surprises, but early on, Tan told YC Companies that “any time you hear about solvency problems in a bank, and that 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 in exposure this year,” according to an internal screenshot seen by TechCrunch.
Twenty-four hours after saying that, Tan took to Twitter to say so “This is an extinction level event for startups and will set startups and innovation back 10 years or more. BIG TECH won’t care about this. They have cash elsewhere. All the small startups, like Google and Facebooks tomorrow, will be extinguished if we don’t find candy “.
According to Tan’s note on Saturday, he appears to be taking the first steps to finding that fix.
“Infuriatingly humble alcohol fanatic. Unapologetic beer practitioner. Analyst.”