Silicon Valley Bank collapse: extinction level event for startups, says YC president Garry Tan

Garry Tan, president at Silicon Valley-based Y Combinator, said the collapse of Silicon Valley Bank (SVB) in the US is an ‘extinction level event’ for startups and will set startups and innovation back by 10 years or more.

Y Combinator, popularly known as YC, has been an early investor in firms like Stripe, Airbnb and others. Its portfolio firms work closely with the SVB which has now been taken over by the US government. Razorpay, Zepto, Meesho are among its biggest India portfolio firms.

“BIG TECH will not care about this. They have cash elsewhere. All little startups, tomorrow’s Google’s and Facebooks, will be extinguished if we don’t find a fix, ” Tan tweeted as the news broke about the faliure of SVB.

ETtech In-depth: Silicon Valley Bank meltdown puts Indian SaaS firms on alert

“30% of YC companies exposed through SVB can’t make payroll in the next 30 days. If you or your company are affected, I recommend that you reach out to your local congressman to get this on their radar TODAY. Now,” Tan added in his tweet thread.

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He suggested startup founders and executives to reach out to the government seeking help from them.

“If you’re affected, here’s what I would say: Hi, I’m a constituent in your district. I work at X, a startup that has deposits with SVB, which was shut down this morning.. We won’t be able to make payroll and we are one of thousands of startups that would have to shut down or furlough workers NEXT WEEK.,” he tweeted citing it as an example.

“We need the FDIC’s help and the government’s help to make sure American tech industry is not set back by a decade, and we can save thousands of workers jobs, including mine.”

ETtech Explainer: how rising US interest rates caused a pincer movement on Silicon Valley Bank

Tan’s comments are of significance as it underscores the nature of the crisis unfolding amid startups in the Valley.

ET reported on Friday saying Indian SaaS firms were put on alert since the SVB stock started crashing earlier this week. Indian investors and founders have been trying to move out deposits from the bank to derisk themselves.

Also read | How Silicon Valley Bank served the tech industry and beyond

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