Silicon Valley Bank collapse: Indian startups feel the jitters too

BENGALURU: The crisis at Silicon Valley Bank (SVB) has not only spooked global stock markets but has given the Indian startup world the jitters.

SVB has exposure to over 20 startups in India and began investing here in 2003. According to startup research advisory Tracxn, SVB has invested in several Indian firms, including Paytm, Carwale, Bluestone, Shaadi and Sarva. In October last year, SVB had invested $150 million in contract intelligence company Icertis.



In fact, SVB started venture lending operations in India through SVB India Finance, the company that provided debt capital to domestic, venture-backed, early and midstage, high-growth companies in the country. SVB opened offices in Bengaluru in 2004 and Mumbai in 2007. It has set up a global tech centre in Bengaluru, employing about 800 people offering services in engineering, analytics and testing.

Sources told TOIthat startups in India are keeping tabs on the development and some are looking to pull their money out of SVB. None of the startup founders came on record toshare their next course of action, but they’re worried about the venture funding tap going dry in a subdued market.

Seed investor Shrishti Sahu tweeted: “Most VCs are telling Indian companies that bank with SVB (roughly 80%startups that have US entities), to get their money out. If this goes on, their deposits are going to get depleted rapidly and most likely end in freezing of funds until a rescue plan is chalked out. ”

Deepak Shenoy, founder and CEO of Capitalmind, said in a tweet, “It (SVB) is in trouble not because of bad lendingpractices, but because of a combination strange way to invest short term money, announcing a capital raise when another bank went bust, and then telling people not to panic. ” Some took to Twitter to draw a comparison as the “Lehman moment for startups”.

Balaji Srinivasan, former CTO of Coinbase, posted on Twitter, “It’s hard to build a business. My sympathies are with Silvergate and SVB, both of which served many customers through good times and bad. I hope SVB pulls through. And that we can eventually build a system that isn’t subject to the vicissitudes of fractional reserve banking. ”