(Reuters) - Several Silicon Valley firms backed by venture capitalists were unsure over whether to apply for a U.S. pandemic aid program, but data analyzed by CB Insights shows a big chunk of companies that raised funds this year also applied for the aid.
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