“‘This is an “extinction level event” for startups and will set startups and innovation back by 10 years or more. BIG TECH will not care about this. They have cash elsewhere. All little startups, tomorrow’s Google’s and Facebooks, shall be extinguished if we don’t discover a repair.’”
That’s Garry Tan on Twitter following the Friday failure of Silicon Valley Bank, the most important financial institution failure because the collapse of Washington Mutual in 2008, calling it an extinction-level occasion for startup companies with the potential set innovation again by a decade.
The president and CEO of startup accelerator Y Combinator fired off that tweet after the Federal Deposit Insurance Corp. was positioned in receivership of Silicon Valley Bank, a unit of holding firm SVB Financial Group
SIVB,
after its closure by California regulators.
Read: SVB Financial floundered as its prime tech debtors burned extreme quantities of money
An issue with FDIC receivership is that the federal regulator solely insures deposits as much as $250,000.
Tan had one thing to say about that:
Silicon Valley Bank operated 13 branches in California and Massachusetts and had about $209 billion in complete property and about $175.4 billion in deposits as of the tip of 2022. The financial institution will reopen on Monday, based on the FDIC.
Read: 20 banks which might be sitting on enormous potential securities losses — as was SVB
Tan went on CNBC and made an much more dire prediction:
Of these “thousands of small businesses” and “big drivers of GDP” sooner or later, Tan stated this: “They’re never going to get a chance to be that in the future, and that will be to the detriment of thousands of jobs, if not tens of thousands of jobs, in the future.”
“The financial world does not have the capability to save these companies, like, we will just wholesale throw out startup innovation in America if we allow these companies to die in the next … weeks … and it really is a matter of next week.”
Tan stated firms have been calling him, asking how they’re going to make payrolls as all their money is in SVB accounts.
“What the FDIC really does need to do is take into account these people, these are the small guys who, if we damage them, it hurts us all,” Tan stated. “This is a national-security issue. … This will splash across all of the economy.”
Source web site: www.marketwatch.com