Y Combinator sends petition to US government; seeks relief, attention over SVB crisis

Famed accelerator Y Combinator, which has backed greater than 200 startups in India, has submitted a petition to the US Treasury Secretary Janet Yellen, in search of aid and a focus over the collapse of Silicon Valley Bank (SVB), which has led to deposits of lots of of startups banking with the California-based lender to be frozen.

The petition, written by Y Combinator president Garry Tan, has been signed by over 3,500 CEOs and founders. The signatories additionally embrace nearly two dozen startups with a base in India.

In the petition, Tan urged the US authorities that small business depositors at SVB needs to be made complete, and regulators ought to conduct a backstop of depositors.

According to a Bloomberg report, the US Federal Reserve and the Federal Deposit Insurance Corporation (FDIC) are contemplating creation of a brand new fund to permit regulators to backstop extra deposits at banks that run into bother following SVB’s collapse.

“We are not asking for a bank bailout,” Tan wrote within the petition. “We ask for relief and attention to an immediate critical impact on small businesses, startups, and their employees who are depositors at the bank”.

“In the Y Combinator community, one-third of startups with exposure to SVB used SVB as their sole bank account. As a result, they will fail to have the cash to run payroll in the next 30 days. By that measure, we can estimate that payroll-related furlough or shutdown will impact more than 10,000 small businesses and startups,” he identified, including that if the typical small business or startup employs 10 employees, this can have a direct impact of furlough, layoff, or shutdown, affecting over 100,000 jobs.

ET reported Saturday that at the very least 60 Y Combinator-backed startups in India had greater than $250,000 every of their financial institution accounts with SVB. Investors have been advising their impacted portfolio startups to right away open new financial institution accounts and divert buyer funds to those alternate accounts to keep up a money circulation.

“Silicon Valley Bank’s failure has a real risk of systemic contagion. Its collapse has already instilled fear among founders and management teams to look for safer havens for their remaining cash, which can trigger a bank run on every other smaller bank,” Tan wrote.

The petition additionally urged the US Congress to work on restoring stronger regulatory oversight and capital necessities for regional banks, and that “any malfeasance or mismanagement on the part of SVB executives leading to this failure should be investigated”.

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