Two renowned tech entrepreneurs OpenAI CEO Sam Altman and Indian American businessman and Venture capitalist Vinod Khosla have revealed plans to offer loans to startups that are impacted by Silicon Valley Bank collapse.
Altman who leads the creator of the AI-powered chatbot, ChatGPT, currently the rave of the moment, disclosed that he is using a decent amount of his capital to provide support for affected firms. He noted that money will be freed up by next week and loans will be made available to help startups that need to make payroll as soon as possible.
In his words, “Today is a good day to offer emergency cash to startups that need it for payroll or whatever. No docs, no terms, just send money. It’s hard for me to imagine depositors actually losing money here, but so stressful in the meantime.”
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On the other hand, visionary entrepreneur and founder of Khosla Ventures, Khosla Vinod took to his Twitter handle to disclose that his company is currently in talks with 100+ portfolio companies to step in and offer the needed financial assistance.
Given a rapidly evolving situation, we are talking to 100+ portfolio companies assessing their critical needs and plan to bridge where we are a lead or major investor at our cost of borrowing only or under special circumstances where a company’s investors are not able to respond
— Vinod Khosla (@vkhosla) March 12, 2023
He wrote,
“Given a rapidly evolving situation, we are talking to 100+ portfolio companies assessing their critical needs, and plan to bridge where we are a lead or major investor at our cost of borrowing only or under special circumstances where a company’s investors are not able to respond”.
Also, Khosla Ventures CMO Shernaz Daver disclosed via an email that the firm’s perspective is that using “LP Capital” in this situation is inappropriate and that the focus for VC firms should not be on making money. He however declined to reveal details on how much capital Khosla has given due to the fact that it’s an evolving situation.
It is also interesting to note that General Catalyst founder Hemant Taneja who had earlier called on founders on the need to diversify and not panic following SVB collapse, has swung into action to assist portfolio companies to make payroll with what he describes as very low-interest loans. Reports disclose that over 400+ global VC firms have come together to show support for SVB/its new incarnation, with more Venture capitalists making plans to offer support.
Such a remarkable gesture is coming after American entrepreneur and venture capitalist Mark Suster had urged more people in the VC community on the need to speak out publicly to quell the panic about Silicon Valley Bank. He stated that he believes the biggest risk to startups AND VCs (and to SVB) would be a mass panic which would further compound more problems for the bank.
Recall that the U.S government through its treasury secretary Janet Yellen on Sunday disclosed that the government would not bail out Silicon Valley Bank, rather it is more concerned about depositors and is focused on trying to meet their needs.