BENGALURU: Days after Silicon Valley Bank (SVB) collapse, start-up accelerator Y Combinator, which has backed over 200 start-ups in India, has said that it will decrease the amount of late-stage investing, and will lay off 17 people or 20% from its team.
Many start-ups backed by Y Combinator have exposure to SVB. This decrease in late-stage investing also comes at a time when Y Combinator in a petition to the US government recently said that one-third of start-ups with exposure to SVB used SVB as their sole bank account.
The accelerator estimated that payroll-related furlough or shutdown will impact over 10,000 small businesses and start-ups. It also said that the shutdown will affect over 1 lakh jobs in the most vibrant sector.
In the country, the start-up accelerator backs companies such as Razorpay and Meesho, among others.
Garry Tan, president and CEO of Y Combinator, in a blog post, said, “Y Combinator is rightly known for early-stage investing. In recent years, we have also done some late stage investing. But late-stage investing turned out to be so different from an early stage that we found it to be a distraction from our core mission. So we’re going to decrease the amount of late stage investing we do.”
He also said that there shouldn’t be any noticeable effect on the companies that they have funded.
Meanwhile, Sanjay Swamy, Managing Partner at Prime Venture Partners said, “All our companies banking with SVB have been able to move 100% of their money out of SVB to other US-based banks.”
Earlier in its petition, the start-up accelerator had said that 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.