Venture Capital: Y Combinator Warns Of Catastrophic Implications From SVB Collapse, Itself Lays Off 20% Of Staff
The Silicon Valley Bank crisis could hit more than 10,000 startups, cost 100K jobs, Y Combinator warned.
Y Combinator, the storied startup accelerator, has petitioned the US government to intervene on behalf of 10,000 small businesses and startups with accounts at Silicon Valley Bank (SVB) who may be unable to pay employees in the next 30 days due to the bank’s insolvency.
The petition warns that over 100,000 jobs could be affected in the tech industry, and that SVB’s failure could trigger a bank run on other smaller banks. (VCCircle)
“We are asking you to save innovation in the American economy,” said Garry Tan, CEO & President of Y Combinator. According to the NVCA, SVB has over 37,000 small businesses with more than $250,000 in deposits, he said. “These balances are now unavailable to them, and without further intervention, according to the FDIC website, may be inaccessible for months to years.”
“If we allow this to happen, it will immediately impact the US technology industry and US competitiveness worldwide and ultimately set back US competitiveness by a decade or more, while the rest of the world races forward,” the petition said.
Meanwhile, Y Combinator is itself cutting back on late-stage investing and reducing the number of checks it writes for such investments, according to a Tech Crunch report today. This would result in the loss of 17 jobs or roughly 20% of the accelerator’s workforce.
Y Combinator CEO, Garry Tan, said that the shift was not related to the recent failure of Silicon Valley Bank. Tan found late-stage investing to be a distraction from Y Combinator’s core mission, which is largely focused on early-stage investing.
The layoffs and departure from growth stage come amid a tech reckoning, but YC has not admitted that these are related to the banking crisis.
Related Story: Federal Support Action For Resolving SVB And Signature Bank Crises
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