Y Combinator calls on Congress to act on SVB collapse

Image Credits: Gary Tan

Serial entrepreneur and venture capitalist Gary Tan is less than three months into his new job as CEO of Y Combinator, one of the best-known accelerator programs in tech. And it looks like it’s been an eventful onboarding process so far. YC was affected by the collapse of Silicon Valley Bank, along with every other corner of the startup world: 30% of companies exposed through SVB are at risk of not being able to make payroll, he tweeted on saturday,

The investor called on Congress to act more decisively to save SVB after regulators took over it on Friday. Tan told Secretary Janet Yellen, Chairman Martin J. Gruenberg, Chairman Sherrod Brown and Chairman Patrick McHenry asking for “relief and attention to the immediately significant impact on small businesses, startups and their employees who are depositors at the bank.” The petition has been signed by over 600 CEOs and founders of companies including Alloy Automation, Atoms, Flutterwave and Brex, whose CEOs are currently trying to raise $1 billion over the weekend to provide emergency credit loans.

“We are not seeking bailout for the bank equity holders or its management; We’re asking you to save innovation in the American economy.”

The memo asks for two things: that small business depositors in SVBs be served through regulators conducting a back stop, and that Congress “reinstate stronger regulatory oversight and capital requirements for regional banks, and that SVB officers reinstates any malfeasance or mismanagement on the part of YC leading up to this failure. YC asks people to fill out a Google Form “If you want to join us in asking the US government to take action That will help prevent 100,000+ job layoffs, prevent future financial crises, and protect American competitiveness in the world.”

The rapid disclosure of SVB’s situation caught many by surprise, but early on Tan told YC firms that “whenever you hear of a solvency problem with a bank, and it can be considered credible, you should consider it should be taken seriously and the interest of the bank should be given priority.” Your startup by not exposing itself at risk could lose more than $250,000 this year, according to an internal screenshot seen by TechCrunch.

twenty four hours after he said, Tan took to Twitter to say “This is an extinction level event for startups and will set back startups and innovation for 10 years or more. BIG TECH will not care. They have the cash elsewhere. All small startups, Google of tomorrow And Facebook, they’ll go out if we don’t find a solution.”

According to Tan’s memo on Saturday, it looks like he is taking the first steps to fix that.