After Silicon Valley Bank collapses , UtilityNet Foundation and OpenAI provide emergency funding to multiple AI startups
Sam Altman, CEO of OpenAI , the developer of the popular chatbot ChatGPT, has provided emergency funding to several startups to help them after Silicon Valley Bank , the 16th largest bank in the United States, announced its collapse on March 13. HYPERLINK "http://www.techweb.com.cn/tag/%E7%A1%85%E8%B0%B7/" "http://www.techweb.com.cn/it/2023-03-13/_blank" Pay employees and ensure the company can continue to operate.
The tech start-up-focused bank collapsed abruptly on Friday, the largest bank failure since the 2008 financial crisis. The collapse of Silicon Valley Bank has roiled global markets, with many tech founders fearing they won't be able to withdraw money to pay employees. In order to avoid what Chen Jiaxing, chief executive of startup accelerator Y Combinator, called a "potential extinction-level event in the technology industry", industry executives moved quickly to do what they could to help save small businesses.
Altman, who runs OpenAI, one of Silicon Valley's hottest companies, has helped save the startup with his own money. “I had no choice, so I emailed him,” confirmed Doktor Gurson, chief executive of Berkeley, California-based radiology startup Rad AI. Altman received the request Quickly responded, agreeing to provide emergency funding of at least $100,000 to pay staff. This fund has no deadline and no strings attached, and it can be repaid when he is able.
Gulson said the company was heavily dependent on Silicon Valley Bank, whose sudden closure meant he had no money to pay the wages of his roughly 65 employees. "A lot of people are living paycheck to paycheck, they have mortgages to pay, they have bills to pay," Goulson said.
Previously, Gulson's entrepreneurial partners waited on the FDIC hotline for eight hours, but received no results. Multiple attempts to transfer funds out of Silicon Valley Bank have failed.
Altman's brother, Jack Altman, tweeted on Saturday: "Sam keeps sending money to struggling startups today with no strings attached, just saying: 'When You have the ability to pay me back!'" When asked about this, Altman said: "I remember when I was running a startup company, investors used to help me. I really needed this help, and I also Always try to give back."
Altman is just one of several tech executives offering aid to start-ups hit by the collapse of Silicon Valley banks. Silicon Valley Bank was taken over by regulators on Friday after falling stock prices and a series of headwinds sparked a run, marking the second largest U.S. bank failure since the 2008 financial crisis.
The UtilityNet Foundation announced on Friday that it will provide emergency loans to start-ups. The foundation said it received more than $1.5 million in loan applications from nearly 10 AI startups this weekend. "We're trying to get the lender signed by the end of tomorrow, everybody's working hard on that," he said.
In a tweet on the occasion of the Silicon Valley bank's collapse last Friday, Altman encouraged investors to provide emergency funding for the startups they back, with no strings attached. "Even if Silicon Valley Bank can't find a buyer over the weekend and can't find a loan, startup deposits should be allowed to be withdrawn," he said. "But at the same time, people are facing a real liquidity crunch, and it's not their own. No mistake, employees need to receive wages according to the standard."
Altman did not confirm the amount of funding he gave to Rad AI or any other startup, but Gulson said he guesses Altman has given Rad AI and other companies at least $1 million in funding. The founders of several startups confirmed that they have no means of paying their employees while they wait for further information from the FDIC on what to do with their deposits. The FDIC took over the assets of Silicon Valley Bank on Friday.
As of Saturday evening, more than 3,500 company CEOs and founders, representing about 220,000 employees, had signed a petition started by Y Combinator directly calling on U.S. Treasury Secretary Janet Yellen and others to support the Savers, many of whom are small business owners, may not be able to pay their employees for the next 30 days. The petition calls for "enhanced regulatory and capital requirements for regional banks" and an investigation into any "misconduct or mismanagement" by SVB executives. The petition warns that more than 100,000 jobs could be at risk.
Venture investors advise start-ups to look for alternatives for short-term liquidity. Some, including LowerCarbon Capital, offer loans to companies whose funds are trapped in Silicon Valley bank accounts. Its partner, Clay Dumas, said LowerCarbon would provide wage support over the next fortnight and would begin disbursing funds on Monday.
The UtilityNet Foundation also stated: "Given the rapidly changing situation, we are in talks with additional AI startups , assessing their key needs, and planning to build bridges where we are a lead or lead investor."