OpenAI's Sam Altman Steps Up to Support Startups Hit by SVB Bankruptcy

Supporting Startups with Personal Funds... "No Repayment Conditions"
Support Continues Across Silicon Valley Locations

Sam Altman, CEO of OpenAI, the developer of ChatGPT that sparked a global artificial intelligence (AI) chatbot craze, has appeared amid the collapse of Silicon Valley Bank (SVB) in the United States. In a situation where Silicon Valley's 'lifeline' has crumbled, Altman personally funded startups that could not even secure immediate employee salaries.

ChatGPT developer OpenAI's CEO Sam Altman [Photo by Reuters]

According to major foreign media on the 12th (local time), Jack Altman, Sam Altman’s younger brother, posted on his Twitter that "Sam sent money today to startups in difficult situations without any paperwork. He just said, 'Please return what you can when you are able.'" This was news that Altman CEO had used his own money to support startups.

Doctor Gerson, CEO of Rad AI, a health AI startup based in Silicon Valley, was one of the recipients of Altman CEO’s support. When the SVB bank crisis broke out, Gerson tried to withdraw the deposit balance from the bank but failed. He also tried to contact financial authorities but said waiting for eight hours was useless.

While desperately seeking a solution, Gerson CEO noticed Altman CEO’s tweet. On the 11th, Altman posted on Twitter, "If there is an investor asking 'How can I help?', today is a good day to send emergency funds to your startup that needs payroll, etc. Send money with no paperwork or conditions." In an interview with foreign media, he said, "I had no choice but to just email him."

Gerson CEO sent an email to Altman CEO with a hopeful heart and received a reply within an hour or two that he would support an amount enough to pay salaries for 65 employees. According to Gerson CEO, there were no special conditions, just a request to repay when possible. Gerson said he had only briefly met Altman CEO in 2014 when Altman was at the accelerator Y Combinator (YC), and they were not well acquainted.

Gerson CEO described Altman CEO’s funds as "a lifeline." He estimated that Altman had sent more than $1 million (about 1.3 billion KRW) even if conservatively counted to several startups. He said, "The really unbelievable thing is that he is not even an investor in our company. He did not ask for anything."

[Image source=Reuters Yonhap News]

When asked by foreign media about the background of supporting startup funds, Altman CEO explained, "I remember the investors who helped me when I was running a startup," adding, "At that time, I really needed money and always try to pay it forward to others."

He founded Loopt, a location-based social networking application (app), at the age of 19 in 2005. The business failed to expand continuously and was eventually acquired by a VC in 2012. Using the funds from selling Loopt, he entered the VC industry and was recognized for his business skills, joining YC, a world-renowned Silicon Valley accelerator known as a 'startup academy,' where he played a key role as president from 2014. During this process, he had many opportunities to closely observe various startups, likely increasing his understanding of startups in financial distress.

Besides Altman CEO, many efforts poured in Silicon Valley to rescue startups hit by the SVB bank crisis. Enrique Dubugras, CEO of fintech startup Brex, said that by the evening of the 11th, the day of the bankruptcy announcement, he had received requests for $1.5 billion from about 1,000 companies. Alim Mawani, founder of software startup Strake with 30 employees, also tweeted that he would personally fund those in need.

YC led and submitted a petition to U.S. government authorities requesting rescue for startups affected by the SVB bank crisis and calling for stronger regulatory supervision of regional banks. YC CEO Gary Tan expressed great concern, saying, "This is an event that could cause the extinction of startups."

Meanwhile, U.S. financial authorities, two days after the decision to close SVB, announced measures including full protection of SVB deposits and liquidity loans to financial institutions facing shortages, attempting to calm the situation.

Immediately after the government’s announcement, Altman CEO expressed his welcome, tweeting, "More regulation on banks is needed. This was a problem of a poorly managed bank." YC’s CEO Tan shared President Joe Biden’s announcement tweet and thanked the White House, Treasury Department, and Federal Reserve (Fed). He added, "This is an appropriate measure to preserve the banking system," and "Depositors will be protected."