Silicon Valley bank collapse worries Indian startups worried

 11 March 2023 

Silicon Valley bank collapse worries Indian startups worried

The collapse of Silicon Valley Bank (SVB) in the US has worried several Indian start-ups that invested in SVB and whose funds may now be blocked.

According to recent data from global software-as-a-service (SaaS)-based market intelligence platform Tracxn, SVB had investments in at least 21 start-ups in India, although the size of the investments in these start-ups was not disclosed.

Moreover, the beleaguered bank has not invested in any Indian start-up recently.

Gokul Rajaram, a board member at Pinterest and Coinbase (NASDAQ:COIN), tweeted that "India-based founders do not know who to turn to as an alternative to SVB".

"Probably the same is true for founders in other countries. As far as I know, SVB was the only bank to bank a Delaware C Corp with founders without SSNs. A unique, technologically advanced bank. A shame what is happening," Rajaram wrote.

According to the California Department of Financial Protection and Innovation, which closed the bank, all insured depositors will have full access to their insured deposits no later than Monday, March 13, 2023.

Nevertheless, heart palpitations can be heard among start-up founders.

"I have heard of some hedge funds fleecing desperate businesses and trying to buy up SRP deposits well below cash value. Those engaging in these predatory practises should remember that karma is real," Rajaram further wrote.

According to the New York Times, SVB was a bank for more than 2,500 venture capital firms, including Lightspeed, Bain Capital and Insight Partners.

"It managed the personal assets of many tech executives and was a loyal sponsor of Silicon Valley tech conferences, parties, dinners and media," the report said.

Josh Butler, CEO of workplace safety analytics startup CompScience, was quoted as saying he had been unable to get his company's money out of the bank.

"Everyone from my investors to my employees to my own mother is asking what is going on. The big question is how quickly will we get to the rest of the money, how much, if any? It's absolutely scary," he said.

On Friday, the Federal Deposit Insurance Corporation took control of the SVB's $175 billion in customer deposits.

"Deposits up to $250,000 have been insured by the regulator. Beyond that, customers have not received any information about when they will have access to their money again," the report said.