The bankruptcy of Silicon Valley Bank (SVB) will have an impact on the operations of small Indian startups that have been backed by venture capital firm Y Combinator. The SVB was handed over to US Federal Deposit Insurance Corporation (FDIC) by California banking regulators.
The startup with deposits in the collapsed bank is awaiting the actions of the FDIC to refund the depositors. Rahul Mathur, CEO of Verak Insurance has stated that more than 60% of Y Combinator (YC) backed startups have deposited over $250,000 in SVB. 40 YC-backed firms have deposits ranging from $250,000 to $1 million while over 20 of them have deposited over $1 million as reported by the Economic Times.
According to Tracxn data, companies with investments from SVB include Shaadi, CarWale, Hitachi Payment Services, BlueStone, InMobi and many more. Paytm and Paytm mall was also included in the list but have given statements that they have no exposure to SVB.
The situation is dire for startups as FDIC has announced that insured depositors will be paid up to $250,000 of their deposits while non-insured depositors will be paid dividends following the sale of the bank.
Union Minister Rajeev Chandrashekar tweeted that he will be meeting with Indian startups to assess and understand the extent of the impact on the Indian startups.
The collapse of SVB adds to the gloomy clouds hovering over the tech startup ecosystem. Amid the funding drought, the startups were depending on their deposits for day-to-day operations. The withdrawal request from startups was one of the factors accelerating cash deposits of SVB.
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