It took just a few days for Silicon Valley Bank from being one of the most sought-after financial institutions among startup founders and the tech community to bring shut down by US regulators.The crisis impacted Indian startups like cross-border SaaS firms and Y Combinator’s portfolio firms.
Here are the top stories from the week to understand how the fallout of the bank affected the domestic startup ecosystem.
Startups on the lookout for ways to move funds from SVB
Startups with funds in SVB are finalising ways to transfer their money elsewhere, even as US regulators made the accounts at the now-shut bank accessible to depositors.While some of them opened accounts at bank branches at the International Financial Services Centre in Gujarat’s Gift City as such banks allow customers to open foreign currency accounts for international transactions others were exploring transferring their deposits to neo banks like Brex in the US and traditional institutions such as JPMorganChase, HSBC and CitiGroup.
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In the Gift City, RBL Bank, ICICI Bank, Kotak Mahindra Bank, Axis Bank and HSBC were working with startups and founders to open accounts.
Govt recommends startups bank locally
Domestic startups must “trust the Indian banking system more,” according to top lawmaker Rajeev Chandrasekhar who also assured them of the Centre’s support to “navigate” the fallout from the abrupt collapse of American lender Silicon Valley Bank.
On Tuesday, the minister of state for electronics and information technology led a virtual meeting with more than 450 startup founders and investors to take stock of the impact of SVB’s closure last Friday.
Startup executives who attended the meeting told ET that the Ministry of Electronics and Information Technology (MeitY) pitched the resilience of Indian banks to them while “urging them to bank locally.”
According to a MeitY statement, Chandrasekhar told the stakeholders, “We will share a list of suggestions with finance minister Nirmala Sitharaman and explore how best your concerns can be addressed. We will also explore how smoothly we can facilitate the transfer of your US dollar deposits to Indian banks, IFSC-centred foreign banks or any other Indian bank which has a presence in the US”.
$ 1 billion worth of startup deposits in SVB, says MoS IT
Indian startups had deposits worth $1 billion in the beleaguered SVB, MoS IT Rajeev Chandrasekhar informed while addressing a Twitter Spaces session, on Thursday.
“I had empirically and anecdotally calculated that there was more than a billion dollars of startup capital as deposits – according to some this is a conservative estimate – in Silicon Valley Bank, attributable to Indian startups,” he said.
He added that the Prime Minister’s Office, the finance ministry, and the Reserve Bank of India were monitoring the situation as soon as the crisis began to unravel last week.
Chandrasekhar also said that by some estimates, almost $200 million has been moved by startups from Silicon Valley Bank to GIFT City
Chandrasekhar also said that by some estimates, almost $200 million has been moved by startups from Silicon Valley Bank to GIFT City.