Sam Altman, Vinod Khosla say they’ll personally lend cash to startups in wake of SVB collapse

General Catalyst, Khosla Ventrude, Kleiner Perkins are among firms offering loans to portfolio companies

take two Biggest Entrepreneur, OpenAI CEO Sam Altman and storied venture capitalist Vinod KhoslaSVBs are offering personal capital to startups on the brink of collapse because their money is locked in a Silicon Valley bank. The bank, which was closed and taken over by regulators on Friday, is involved in nearly half of all US venture capital-backed startups.

Beyond the fact that investing is an investor’s job, there is something to be said about using personal capital to help businesses. The situation, increasingly unfolding, is also complicated by the fact that it is a weekend so people cannot easily access money or do not have liquid cash.

Altman, the former CEO of Y Combinator, confirmed that he is using a “decent amount” of personal capital. He believes the money will be freed up by next week and the loans are more likely to help startups that “need to make payroll right now.”

Khosla said on Twitter that he is offering personal loans at the cost of debt to companies in the Khosla Ventures portfolio. Both Altman and Khosla took to Twitter to urge other venture capitalists to offer emergency cash to employees. “Today is a good day to offer emergency cash to your startups who need it for payroll or whatever. No docs, no stipulations, just send money,” tweeted Altman, while Khosla said the big VC firms should step in, “especially those taking home fees.”

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Shernaz Davar, CMO at Khosla Ventures, said over e-mail that the firm’s view is that it is “inappropriate” to use “LP capital” in this situation and that the focus of VC firms should not be on making money. Davar declined to share details of how much capital Khosla has given, as it is an emerging situation.

This is a more difficult option for those who do not have the ability to invest personal capital in startups. For example, if a venture capitalist uses money raised from an LP, the terms will need to be firmer because of the expected upside of that capital. (A venture capitalist responded to Altman’s call to action by saying they are giving half of their final check to SAFE, using investors’ money, along with the terms of the final round).

general catalyst Hemant Taneja He’s also helping portfolio companies make payroll with what he described on Twitter as “very low interest loans.” It is not clear whether GC is using personal capital of the partners or money from the fund. Other funds working on the lending are Khosla Ventures, Greylock, Mayfield, Kleiner Perkins, Upfront, Ribbit Capital, Redpoint, Lightspeed and Altimeter Capital, according to Taneja’s tweet.

An investor whose primary fund and management company account was at SVB is waiting on Monday to find out how much money they can offer in the first place. The investor who spoke to TechCrunch on background said they are stipulating checks on a case by case basis and that the exact terms for these deals are still being worked out by lawyers. They need to make sure it’s legal – given that a loan license may be required to give loans.

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Right now, he said, the best practice is a promissory note or convertible note with a repayment feature.

Vinny CEO & Co-Founder sarah moskoff said its venture backers are offering “an incredible lifeline right now”

“I am fortunate to have great supporters who know the strengths of my business and are willing to help with this timely issue,” he told TechCrunch. “At the moment everyone is working through it, but my investors are not at all looking to make money from it. They are only looking for a legally acceptable route.

Erica Wenger, a former head of platforms at Worklife who is currently building his own venture firm, said GP needed to write off large checks for later-stage special purpose vehicles to its limited partners, especially family Depend on the offices. That said, she says the legal complexities around how these loans and investments are structured are giving her pause.

“If it were me, I would explore every option to ensure that my portcos are covered,” she said, noting that emerging fund managers do not have the capital to do so on their own. “GP has relationships with deep pockets. It’s in everyone’s best interest to see these companies succeed!”

Other leaders in the tech world are also looking for ways to unlock cash for founders in distress. Brex CEO Henrique Dubugras is currently working to raise more than a billion dollars in one weekend to help finance an emergency bridge credit line that he believes will help startup customers affected by the collapse of Silicon Valley Bank next week. Will help make payroll. Dubgrus declined to comment on how much capital has been committed to the credit line so far, but said he is trying to close the money on back to back calls.

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If you have a juicy tip or lead about the events that happened in the wake of SVB’s collapse, you can reach Natasha Mascarenhas on Twitter @nmasc_ or Signal at +1 925 271 0912. Anonymity requests will be honored.

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