US Silicon Valley Bank’s Position Calms Indian Startups: Nasscom

New Delhi:

Apex IT industry body Nasscom on Monday said the US administration’s stance on protecting depositors of the failed Silicon Valley bank is “reassuring” for Indian startups with funds in the bank.

The announcement by the Biden administration that depositors of the failed Silicon Valley Bank (SVB) will be able to access their money has given hope and will immediately resolve the financial problems these startups are struggling with, Nasscom senior vice-president and chief strategy officer Sangita Gupta told PTI.

California-based SVB, the 16th largest bank in the United States, was closed on Friday by the California Department of Financial Protection and Innovation, which later appointed the US Federal Deposit Insurance Corporation (FDIC) as its receiver.

SVB is deeply embedded in the tech startup ecosystem and the default bank for many high-flying startups; its collapse was one of the biggest bank failures since the 2008 global financial crisis.

The bank failed after clients – many of the venture firms and VC-backed companies that the bank overworked – began pulling their deposits, causing a run on the bank.

“The statement (issued by the Department of the Treasury, Federal Reserve and FDIC) will give confidence to Indian startups that have invested in SVB and address the financial challenge they are struggling with in an immediate manner,” said Nasscom’s Gupta.

An industry watcher said the past few days had been “stressful” for start-ups and companies exposed to SVB, and the US government’s announcement signaled relief for those left in dire straits after last-minute efforts to recover deposits failed. last week.

Of course, it will be waiting and watching how long the whole process takes. That is, the “energy levels” among such startups have been different since the US administration’s assurances arrived, the sources said.

Analysts say companies will now be more vigilant and careful about how they deposit funds and may choose to spread their deposits across multiple accounts and banks to preserve their money and reduce risk.

Additionally, We Founder Circle founder Gaurav V.K. Singhvi noted that over the years, SVB has been a reliable and affordable bank for many Indian SaaS (Software as a Service) and Y Combinator-backed startups due to its versatility. , adaptability and convenience of fundraising activities.

“… the news of its sudden collapse came as a surprise to many, forcing many startups to transfer their accounts to different banks, but its collapse has limited direct and indirect impact on Indian startups,” Singhvi said. said.

“Wwe also have to recognize that SVB’s clients have been struggling for cash for the past one year and with limited runway, if they don’t get their cash on time for salaries and other operational purposes, the consequences could be dire,” Singhvi added. .

Founded in Mumbai in 2020, We Founder Circle (WFC) is a global community of founders and strategic angels who have come together to advance the startup industry and guide it on a path of robust growth.

WFC provides startups with seed funding, business development and global networking opportunities because it believes that early-stage businesses need more than just financial support to scale and sustain. Since its inception, it has invested USD 20 million in more than 100 startup deals.

(Except for the headline, this story was not edited by NDTV staff and was published on a syndicated channel.)