Indian Startups Impacted by the Silicon Valley Bank Collapses
The Silicon Valley Bank in the US State underwent a major crisis, impacting Indian startups' venture capitals.
The Silicon Valley Bank (SVB) has undergone a rapid crisis and transformation in recent times, from being the most sought-after financial institution among startup founders and the tech community to facing a bring-in shut down by the US regulators. This very scenario has highly impacted Indian startups–cross-border SaaS firms and Y combinator's portfolio firms–affecting the domestic startup ecosystem. As a result, startups with proprietary funds in SVB are seeking out potential ways to transfer their money elsewhere, following US regulators, who are making accounts at the now-shut bank accessible to depositors.
Various venture capitalists have opened accounts at bank branches at the International Financial Services Centre in Gujarat’s Gift City, allowing customers to open foreign currency accounts for international transactions. Meanwhile, several other depositors are transferring their deposits to neo-banks in the US and traditional institutions like JPMorgan Chase (JPM: NYSE), HSBC (HSBA: LON), and CitiGroup (C: NYSE).
A top lawmaker and a Rajya Sabha Member, Rajeev Chandrasekhar reinstated the importance of trusting the Indian banking system for domestic startups. He also assured the Centre’s support for depositors in navigating the fallout from the collapse of the renowned American lender Silicon Valley Bank.
The minister for electronics and information technology led a virtual meeting recently, where nearly 450 startup founders and investors participated, discussing the impact of SVB’s closure. Attendees of the summit noted that the Ministry of Electronics and Information Technology (MeitY) has critically pitched the resilience of Indian banks with the growing urge to bank locally.
Mr. Chandrasekar, when addressing the stockholders stated that post sharing varied suggestions with the Indian finance minister, Nirmala Sitharaman, typical methods to address these rising concerns will likely be proposed in upcoming periods, in addition to an easy transferring of US dollar deposits to Indian banks, IFSC-centered foreign banks, and other Indian banks with a branch in the US.
Deposits of Indian startups in the SVB holds worth more than one billion dollars, whereas, certain startup capital with deposits has a conservative climate. Thanks to the combined and serious efforts of the Indian Prime Minister’s Office, the finance ministry, and the Reserve Bank of India, the situation was monitored in real-time since the commencement of the crisis in the previous week. Nearly 200 billion USD have likely been moved by startups from Silicon Valley Bank to GIFT City post the crisis.