Silicon Valley Bank collapse is impacting many Indian startups
The sudden collapse of Silicon Valley Bank, which served as lifeblood for startups, is additionally impacting companies 8,000 miles away.
Dozens of younger Indian startups backed by the likes of YC, Accel, Sequoia India, Lightspeed, SoftBank and Bessemer Enterprise Companions banked with Silicon Valley Bank, typically as their solely banking accomplice, and couldn’t take out the cash on time, a number of individuals acquainted with the state of affairs mentioned.
VCs are cautious about divulging the names of the impacted startups out of worry that it might affect the younger companies’ prospects of elevating capital sooner or later. Regulators stepped in Friday to close down Silicon Valley Bank, the sixteenth largest within the U.S. and the financial institution for many startups.
Some Indian companies couldn’t well timed transfer their funds from Silicon Valley Bank as a result of they didn’t have one other US banking account available, many enterprise capitalists recounted.
Many Indian startups are integrated in Delaware to make it simpler for them to lift capital from U.S. enterprise companies reminiscent of Y Combinator. Some SaaS companies are registered within the U.S. as a result of at the same time as they function from India, they wish to serve the worldwide markets and wish to be seen as a US-firm.
And for many companies that “flipped” their residence base from to the U.S. from India, Silicon Valley Bank was the popular alternative, one other particular person acquainted with the matter mentioned, pointing to many occasions sponsored by SVB.
Practically all Indian SaaS startups with massive presence within the U.S. banked with Silicon Valley Bank, a accomplice at one of many prime enterprise funds mentioned. Over a dozen Indian SaaS unicorns and many extra “soonicorns” are headquartered within the U.S.
Many of those younger companies didn’t diversify their funds into a number of banks as a result of within the early days it’s often not possible to extend admin and working prices.
A U.S.-based investor, who requested anonymity talking candidly, mentioned he knew for a indisputable fact that many Indian companies had about $4-10 million parked of their SVB accounts. A bunch of Indian YC founders polled members about their publicity to SVB and located that greater than 60 companies had over $250,000 parked in SVB, in keeping with outcomes seen by ClassyBuzz.
Indian SaaS startups and in any other case these backed by YC who arrange their corporations within the U.S. and raised their maiden spherical there usually had SVB as their default financial institution, Ashish Dave, India head of Mirae Asset, tweeted. “Uncertainty is killing them. Development ones are comparatively safer as they diversified.”
Garry Tan, the president of Y Combinator, mentioned greater than a 1,000 YC-backed startups are impacted by the collapse of Silicon Valley Bank. “30% of YC corporations uncovered by way of SVB can’t make payroll within the subsequent 30 days,” he tweeted.
This is a CREDIT occasion & credit score occasions are to not be taken frivolously. The ripple impact of this might be that some early stage startups should increase fast rounds at decrease valuation to outlive. This implies markdowns or write off’s for funds, layoffs at companies. #SVB
— Ashish Dave | आशीष दवे (@ashishdave) March 11, 2023
The story will probably be up to date as we be taught extra.