Some venture capitalists had advised their portfolio companies
to avoid dipping into the $660 billion program unless they were
out of cash or had no other way to raise funds. Some said they
felt the funds should be reserved for "Main Street" small
businesses without deep-pocketed backers.
But CB Insights has found more than 9,600 companies that were
backed by venture capital, private equity, angel, and other
investors were approved for $150,000 or more in Paycheck
Protection Program (PPP) loans. Over 2,200 of them raised money
last year, and more than 1,200 of them raised money this year.
For its analysis, released on Tuesday, CB Insights used its
company-matching technology on a big data dump by the Treasury
Department released Monday of the names of companies that were
approved for the loans.
Businesses that applied for aid needed to certify the "current
economic uncertainty makes the loan necessary" for ongoing
operations.
Kathleen McGee, a lawyer at Lowenstein Sandler in New York City,
has advised companies that if they have cash in the bank that
will sustain them for a year, then it could be a red flag for
regulators later.
Investors with the most portfolio companies listed as approved
for the loans were Plug and Play Accelerator with 140 companies
followed by Y Combinator with 129 companies.
Andreessen Horowitz, among top venture capital firms in Silicon
Valley, had 55 portfolio companies on the list, CB Insights data
shows. Sequoia Capital, another big venture capital player, had
23 portfolio companies on the list.
(Reporting By Jane Lanhee Lee; Editing by Himani Sarkar)
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