Will meet startups to discuss impact of Silicon Valley Bank shutdown: MoS IT Rajeev Chandrasekhar

“The @SVB_Financial closure is certainly disrupting startups across the world. Startups are an imp part of #NewIndia Economy. I will meet with Indian Startups this week to understand impact on them n how @narendramodi govt can help during this crisis,” Chandrasekhar tweeted.

The SVB crisis has sent shockwaves across the tech ecosystem and investor community as the bank — one of the key financial institutions supporting tech startups — collapsed in less than 72 hours.

The developments have impacted Indian startups , particularly those operating in the software-as-a-service (SaaS) sector and the ones in the Y Combinator portfolio. ETtech reported that as many as 60 Indian startups have deposits stuck in SVB.

ETtech

We also reported on March 10 that venture capital funds checked in with homegrown startups, especially those headquartered in the US, about how much of their capital is held at SVB Financial Group after the bank shut down.

Discover the stories of your interest

While late-stage Indian-origin SaaS (software as a service) firms like Zenoti told ET that they moved out of SVB last year, early-stage SaaS firms do bank with the troubled lender. Saurabh Kumar, founder, and CEO of early-stage firm Rezolve.ai said the company was keeping a close watch on the developments.New-age lenders Mercury and Brex have come up to be platforms of choice for most early-stage startups, mainly operating in the software-as-a-service (SaaS) domain, multiple investors and founders told ET.

“We moved 90% of our money from SVB to Brex in the first half of Thursday — I did it even before the recommendation of VC funds,” Lightspeed-backed Rephrase.ai founder and CEO Ashray Malhotra told ET. “I have had my personal money stuck in Yes Bank for a while. Big learning. As a result of that, I don’t care how good a bank is, the safety of the principal is important.”

Healthtech SaaS unicorn Innovaccer founder and CEO Abhinav Shashank told ET that there is a general concern.

While Indian-origin software startups were among the first to be identified as affected by the SVB meltdown, new-age Indian ventures with YC backing are a worried lot.

A founder of a YC-backed fintech startup, which serves non-resident Indians in the US, said while immediate payroll would be managed, problems would arise if funds are stuck after that.

“The next steps for us – wait for the US Fed to act till Monday; fill out nominations to get in line to get dividends when SVB assets are distributed; figure out a short-term liquidity plan (next two months). Since transfers were blocked/paused yesterday, most of us didn’t get a chance to transfer,” the founder told ET.

(Graphics & Illustrations by Rahul Awasthi)