Y Combinator Calls on Congress to Act on SVB Collapse

Photo credit: Garry Tan

Serial entrepreneur and venture capitalist Garry Tan has taken his new job as CEO of Y Combinator, one of the most well-known accelerator programs in technology, in less than three months. And it seems like it’s been an eventful onboarding process so far. Like pretty much every other corner of the startup world, YC was affected by the collapse of Silicon Valley Bank: 30% of companies are exposed via SVB and are at risk of not being able to do payroll, 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, Chair Martin J. Gruenberg, Chair Sherrod Brown and Chair Patrick McHenry, asking “for relief and attention to an immediate critical impact on small businesses, startups and their employees, the depositors are at the bank”. The petition is signed by over 600 CEOs and founders from companies like 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 of the bank’s shareholders or management; we ask you to save innovation in the American economy,” the petition reads.

The memo calls for two things: that small business depositors be restored to the SVB through the implementation of a backstop by regulators, and that Congress “restore stronger regulatory oversight and capital requirements for regional banks, as well as any wrongdoing or mismanagement on the part of SVB executives leading to.” leading to this error should be investigated.” YC is asking people to fill out a Google form “if you would like to join us in asking the US government to take action to help stop the layoffs of over 100,000 employees to prevent a future financial crisis and to protect US competitiveness in the world. ”

The rapid development of the SVB situation has surprised many, but Tan told the YC companies early on that “every time you hear problems with a bank’s solvency and it can be considered credible, you take it seriously and the interests.” should prioritize your startup by not exposing yourself to more than $250,000 in exposure this year,” according to an internal TechCrunch screenshot.

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 take care of that. You have cash elsewhere. All small startups, tomorrow’s Google and Facebook, will be wiped out if we don’t find a solution.”

According to Tan’s memo from Saturday, it looks like he’s taking the first steps towards finding that solution.