Concerns over the impact of Silicon Valley Bank’s (SIVB.O) collapse on the Indian start-up industry have led India’s state minister for technology to announce on Sunday that he will meet with start-ups this week to examine their impact.
After a run on the lender, which had $209 billion in assets at the end of 2022, in which depositors withdrew as much as $42 billion in a single day, California banking regulators closed Silicon Valley Bank (SVB) on Friday. This left the bank insolvent.
“New India’s economy heavily relies on startups. In order to understand the impact on them and how the government can assist during the crisis, I will meet with Indian startups this week “State minister for information technology Rajeev Chandrasekhar posted on Twitter.
India has one of the largest start-up ecosystems in the world, with many recording recent valuations of multiple billion dollars and receiving support from foreign investors who have placed risky bets on digital and other such enterprises.
The greatest U.S. financial failure since the 2008 financial crisis, SVB’s loss has shaken up global markets, taken a toll on banking equities, and is now worrying Indian businesspeople.
One lender to Indian start-ups and two partners at an Indian venture capital fund told Reuters that they are checking with portfolio businesses to see if they have any SVB exposure and, if so, whether it constitutes a sizable portion of their total bank balance.
According to the three persons, consumer internet businesses, which have received the majority of funding in India recently, are less affected because they either do not have SVB accounts or have little exposure to them.
Ashish Dave, CEO of Mirae Asset Venture Investments (India), tweeted, “Spoke to few founders and it is pretty horrible.
“SVB is the default bank, especially for Indian founders who established their American businesses and raised their initial round. They are dying from uncertainty. Growth companies are safer in that they are more diversified. Founders didn’t need it at all.”
According to Freshworks (FRSH.O), a software company, its exposure to the SVB scenario is relatively low given the balance sheet as a whole.
“As we expanded, we added more substantial, diversified institutions, such Morgan Stanley, JP Morgan, and UBS. Today, SVB does not hold the vast bulk of our cash and marketable securities “Freshworks stated in a blog post that it does not anticipate any inconvenience to its staff or clients.
According to Freshworks, it is assisting clients and suppliers who were using its SVB account to switch to alternative bank accounts.
In a stock exchange filing, mobile gaming company Nazara Technologies Ltd. of India stated that two of its subsidiaries, Kiddopia Inc. and Mediawrkz Inc., have cash balances with SVB totaling $7.75 million, or 640 million rupees.
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