SVB Collapse: OpenAI's Sam Altman and Indian-American businessman Vinod Khosla come to the rescue

Following the unexpected collapse of the Silicon Valley Bank and the subsequent collapse of the Signature Bank, major tech companies, especially startups who had their seed capital and operational funds in these banks have started to panic. Even though the US government has assured that depositors in SVB will be bailed out, that in itself will be a time consuming process. Tech companies, especially startups need access to their operational funds constantly for a number of reasons - starting from paying salaries to settle vendor payments or even renewing licenses, constant and unhindered access to operational funds or operating capital is crucial for any business. VCs stepping up with their own money Seeing the situation that the startups and VCs in silicon valley are in and as their money stays tied up at Silicon Valley Bank, OpenAI CEO Sam Altman and renowned venture capitalist Vinod Khosla are giving personal capital to companies on the verge of a collapse because of SVB’s failure.   The bank, which was closed and taken over by regulators on Friday, is engaged with nearly half of all venture capital-backed companies in the United States. Aside from the fact that it is an investor’s responsibility to invest, there is something to be said about using personal money to assist businesses.   The quickly evolving situation is further compounded by the fact that the collapse took place over a weekend, so people could not readily transfer money. Some of them did not have the liquidity, to begin with.   Altman, the former head of Y Combinator, has spoken to the media and verified that he is investing “a decent sum” of his own money. He thinks the funds will be available by next week, and the loans are intended to assist companies that “need to make payroll now." Low-interest loans being handed out Khosla announced on Twitter that he is providing personal financing at low-interest rates to businesses in the Khosla Ventures portfolio. Altman and Khosla both went to Twitter to encourage other venture capitalists to provide workers with emergency funds.   “Today is a good day to give emergency funds to your businesses that need it for salary or whatever reason. “No docs, no terms, just give money,” Altman wrote, while Khosla suggested that big VC companies, “especially those bringing home millions in fees,” step up. Khosla Ventures CMO Shernaz Daver told people involved in the matter via an email that using “LP capital” in this circumstance is “inappropriate,” and that the emphasis for VC companies should not be on earning money. Hemant Taneja of General Catalyst is also assisting client businesses with payments with “very low-interest financing,” as he characterises them on Twitter. It is unknown whether GC is using participants’ personal funds or funds from the fund.   According to Taneja’s post, other funds working on credit offerings include Khosla Ventures, Greylock, Mayfield, Kleiner Perkins, Upfront, Ribbit Capital, Redpoint, Lightspeed, and Altimeter Capital. One investor, whose main fund and management business account were both at SVB, is waiting until Monday to find out how much money they can give in the first place.   The investor stated that they are deciding checks on a case-by-case basis and that the proper conditions for these transactions are still being worked out by attorneys.   They must ensure that it is lawful, as giving money may necessitate the acquisition of a lending licence. According to them, the ideal practice right now is a promissory note or convertible note with a repayment component. Giving back to the industry Sara Mauskopf, CEO and co-founder of Winnie, stated that her venture investors are providing “an amazing lifeline right now." “I’ve been lucky to have excellent supporters who understand the strength of my company and are ready to assist with this timing problem,” she told reporters.   “Everyone is working through this right now but my sponsors are not seeking to make money from this at all. They’re just searching for a legally sound way forward." Erica Wenger, a former Worklife platform chief who is now developing her own venture firm, advised GPs to rely on their limited partners, particularly family offices, to write large checks for later-stage special-purpose instruments.   However, she expresses concern about the legal complexities surrounding many of these debts and assets. Other tech leaders are also searching for methods to free up funds for founders in trouble. Brex CEO Henrique Dubugras is working to collect more than a billion dollars in a single weekend to help finance an emergency bridge credit line that he thinks will allow startup customers affected by Silicon Valley Bank’s failure to make payroll next week.   Read all the  Latest News ,  Trending News ,  Cricket News ,  Bollywood News , India News  and  Entertainment News  here. Follow us on  Facebook,  Twitter and  Instagram.