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General Catalyst, Khosla Ventrues, Kleiner Perkins among firms looking to lend to portfolio companies
The two technologies Big entrepreneurs, CEO of OpenAI Sam Altman And a venture capitalist with a history Vinod KhoslaSVB is giving private capital to startups on the brink of bankruptcy because their money remains locked up in a Silicon Valley bank. The bank, which came under regulatory scrutiny on Friday, is involved in about half of all US venture capital-backed startups.
Aside from investing being an investor’s job, there is something to be said for using private capital to help businesses. The situation is complicated by the fact that people cannot easily move money or do not have liquid cash because it is happening fast, it is weekend.
Altman, the former CEO of Y Combinator, confirmed that he would use a “decent amount” of private capital for TechCrunch. He believes that the money will be released next week and the loans are more to help the startups who “have to pay their salaries now”.
Khosla said on Twitter that he is offering personal loans at the cost of borrowing to companies in the Khosla Ventures portfolio. Altman and Khosla both took to Twitter to urge other venture capitalists to provide emergency funds to employees. “Today is a good day to provide your startup with emergency cash for a salary or whatever. No docs, no contracts, just send money,” Altman tweeted, while Khosla said big VC firms should grow, especially those taking home millions.
Khosla Ventures CMO Shernaz Daver said in an email that the firm’s view is that using LP capital in this situation is “not appropriate” and that the focus of VC firms should not be on raising money. Daver Kozla declined to share details of how much capital he has given because the situation is evolving.
It is a very difficult option for startups who do not have the capacity to invest personal capital. If a venture capitalist uses money raised from LPs, for example, the terms should be stronger because of the expected increase in that capital. (One venture capitalist responded to Altman’s call to action, offering half of their final check at CFA, along with the terms of the last round, using investors’ money).
General catalyst Hemant Taneja It’s also helping portfolio companies pay off what it described on Twitter as “very low interest loans.” It is not clear if GC is using the partners’ personal capital or funds from the fund. Other funds working to provide loans are Khosla Ventures, Greylock, Mayfield, Kleiner Perkins, Upfront, Ribbit Capital, Redpoint, Lightspeed and Altimeter Capital, Taneja tweeted.
An investor whose account was at SVB, a primary fund and management company, is waiting until Monday to find out how much money they can first offer. The investor TechCrunch spoke with said that they are deciding the checks on a case-by-case basis and the exact terms of these deals are still being worked out by lawyers. They need to make sure it’s legal – as lenders may need a loan approval.
Currently, the best practice is a promissory note or convertible note with a payment feature.
Winnie’s CEO and founder Sara mousehead She said her fans are providing an “amazing lifeline right now.”
“I’m fortunate to have great supporters who recognize the strength of my work and are willing to help in this time of need,” she told TechCrunch. “Everyone is working on this right now, but my investors are not looking to make money from this. They are looking for a legally acceptable way.”
Erica WengerA former head of platforms at WorkLife and currently building her own venture firm, GPs need to rely on certain partners, particularly family offices, to close large checks for special-use vehicles that appear later. That said, she says the legal complexities surrounding many of how these loans and investments are structured give her pause.
“If it were me, I would explore all options to make sure my pigs are covered,” she said, adding that emerging fund managers don’t have the capital to do so themselves. “GPs have connections with deep pockets. It’s in everyone’s interest to see these companies succeed!”
Other leaders in the tech world are also looking for ways to unlock money for venture capitalists. Brax CEO Henrique Dubugras It is currently working to raise more than $1 billion by the end of the week to fund a disaster bridge line of credit that it believes will help startup customers affected by the collapse of Silicon Valley Bank make payroll next week. Dubougras declined to comment on how much capital has been committed to the line of credit yet, but said he will return calls as he tries to lock in funds.
If you have a juicy tip or lead on what happened as a result of the SVB collapse, you can reach Natasha Maskerenhas on Twitter @nmasc_ or by Signal at +1 925 271 0912. Identity requests will be honored.
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