We cut SVB exposure, 1.3% funds at risk: HighRadius

Bengaluru: Financial software firm HighRadius has reduced its exposure to Silicon Valley Bank. Its president and CEO Sashi Narahari, in an email to employees on Saturday, said SVB has been the company’s primary bank for several years.

“Only 1.3% of the funds are at risk. We were able to reduce our risk by moving money out of the SVB cash accounts (yesterday),” the mail read. HighRadius is learnt to have 3,000 employees in India. Last year, it raised $300 million and was valued at over $3 billion. It offers cloud-based software for the CFO's office. It counts 3M, Unilever, Sanofi, Kellogg Company, Danone and Hershey’s among its customers.

Narahari said 26% of its funds kept in different banks are not at risk, and 73% of the funds are investments in SVB custodian accounts that are also not at risk.

“These investments are in secure US treasury bills, and investment-grade corporate bonds held by a third party. We expect this to be available to us next week via an FDIC-backed entity,” he said, ruling out any impact on payroll processing next week as well as any payroll on an ongoing basis.

SVB, on its website, said FDIC transferred all deposits — both insured and uninsured — and substantially all assets of the former Silicon Valley Bank to a newly created bridge bank to protect its depositors. It said depositors will have full access to their money beginning this morning, when Silicon Valley Bank, the bridge bank, resumes normal banking hours and activities, including online banking.

An email sent to HighRadius on the SVB exposure and the way forward didn’t elicit a response till the time of going to the press. However, some employees said they were worried about their jobs. Narahari assured employees that the 2023 budget is funded. “Combination of this cash and the fact that we run as a near-breakeven business means we are good for 2023.” He said there are no changes to the 2024 plan. “2024 and onwards, we expect to be a profitable business, so we should be fine in the long term.” He ended on a positive note: “Over the next couple of weeks, you will hear a lot of noise in social media about tech companies not being able to hit payroll. This might be true of some companies (but not HighRadius).”

In February, HighRadius said its client base grew 24% year on year to over 800 clients, including 200 from the Forbes Global 2000. It has opened its fifth European office in Poland, while growing its headcount by 28% across London, Amsterdam, Frankfurt and Paris.

Risk is inevitable in biz, idea is to survive, says Zerodha chief exec
Zerodha founder and CEO Nithin Kamath on Monday said every business will be exposed to a black swan event at some point; the idea is to survive those. "It is ridiculous how many things can go wrong when running a business. Everything from rapid change to market sentiment to waking up one day and being unable to access money in the bank, like with SVB," he said in a LinkedIn post. " I think an underrated skill set for running a business is being pessimistic. "Consider everything a risk and do everything you can to mitigate it. Every business will be exposed to a black swan event at some point; the idea is to survive those," Nithin Kamath said. "The lesson from SVB or Yes Bank in the Indian context is to have funds, especially working capital, distributed across a bunch of banks."

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