With the United States-based Silicon Valley Bank’s (SVB) failure, renowned venture investor Vinod Khosla and CEO of OpenAI, which developed ChatGPT, Sam Altman, reportedly gave their own money to support start-ups and entrepreneurs.
Silicon Valley Bank, which was shut down and taken over by regulators in March 2023, is involved with nearly half of all US venture capital-backed startups, as per a TechCrunch report.
According to Vinod Khosla, he is providing firms in the Khosla Ventures portfolio with personal loans at borrowing costs.
He tweeted, “We are talking to 100+ portfolio firms analysing their essential requirements and plan to bridge where we are a lead or prominent investor at our cost of borrowing alone or under unusual circumstances when a company’s other investors can’t react.”
“Personal loans are provided to our firms at the borrowing rate. We focus on businesses that are too tiny or have structural limitations. We need other significant VC companies to step forward as well, especially those charging millions in fees,” he remarked further.
Khosla Ventures CMO Shernaz Daver said that the firm’s perspective goes against using “LP capital” in this situation, as the present scenario is “inappropriate,” along with the principle that venture capital firms should not be aiming to make money.
Shernaz Daver, however, declined to share details on how much capital Vinod Khosla has given so far.
According to Sam Altman, “Today is a wonderful day to provide your businesses emergency cash they need for paying employees or whatever else, just send money; no paperwork; no agreements.”
“It’s difficult for me to think that depositors are genuinely losing money in this situation, but it’s still quite problematic,” he stated further.
The OpenAI CEO and the former Y Combinator head also confirmed to TechCrunch that he was using a ‘decent amount’ of personal capital. He believed that money will be freed up by March last week and the loans are more to help startups which ‘need to make payroll now.’
Sara Mauskopf, the CEO and co-founder of Winnie, stated in a tweet that using Silicon Valley Bank’s credit card was a requirement of their deal with them.
“This past weekend, it was turned off. Because our supporting bank account with Brex was SVB, they likewise stopped the charges when we attempted to send them to Brex. As a result, personal cards are used,” she shared.
General Catalyst‘s Hemant Taneja is also helping portfolio companies make payroll with what he describes on Twitter as “very low-interest loans.”
Other funds working on offering loans, per Taneja’s tweet, are Khosla Ventures, Greylock, Mayfield, Kleiner Perkins, Upfront, Ribbit Capital, Redpoint, Lightspeed and Altimeter Capital.
Brex CEO Henrique Dubugras is reportedly working to raise over a billion dollars to help fund an emergency bridge credit line that he believes will help start-up customers impacted by Silicon Valley Bank’s collapse be able to make payrolls by March end.
As the bank was unexpectedly shut down, US Treasury Secretary Janet Yellen stated that the federal government would not bail out Silicon Valley Bank’s stockholders. But, she added that banking authorities are “concerned” about the impact on depositors and are trying to meet their needs.