by Y Combinator3/11/2023
Over 5,000 CEOs and founders representing over 400,000 employees have signed this petition: https://docs.google.com/forms/d/e/1FAIpQLSd0_0JOGdaXSDs-WaAXzzEy_tR7akOF7GBTfTb-r-Me0trNPQ/viewform?usp=sf_link
To the Honorable Secretary Janet Yellen, Chairman Martin J. Gruenberg, Chairman Brown, and Chairman McHenry:
We, the undersigned, are deeply concerned about the rapid failure of Silicon Valley Bank, a leading financial institution that has played a vital role in supporting the technology industry in the United States. We are not asking for a bailout for the bank equity holders or its management; we are asking you to save innovation in the American economy.
We ask for relief and attention to an immediate critical impact on small businesses, startups, and their employees who are depositors at the bank. According to the NVCA, Silicon Valley Bank has over 37,000 small businesses with more than $250,000 in deposits. These balances are now unavailable to them, and without further intervention, according to the FDIC website, may be inaccessible for months to years.
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. If the average small business or startup employs 10 workers, this will have an immediate effect of furlough, layoff, or shutdown, affecting over 100,000 jobs in the most vibrant sector of innovation in our economy.
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.
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.
We have a simple ask:
- Small business depositors at Silicon Valley Bank should be made whole. Regulators need to conduct a backstop of depositors. We are not asking for a bank bailout.
- Longer term, Congress should work to restore stronger regulatory oversight and capital requirements for regional banks, and any malfeasance or mismanagement on the part of SVB executives leading to this failure should be investigated.
This requires swift and decisive action in order to prevent further shockwaves through the economy that could lead to financial crisis and layoffs of more than 100,000 workers. We must protect US competitiveness in the world.
Thank you for your attention to this important matter.
Garry Tan, CEO & President Y Combinator
Over 5,000 CEOs and founders representing over 400,000 employees have signed this petition. If you're a current founder or CEO, please consider signing: https://docs.google.com/forms/d/e/1FAIpQLSd0_0JOGdaXSDs-WaAXzzEy_tR7akOF7GBTfTb-r-Me0trNPQ/viewform?usp=sf_link