How the Closure of Silicon Valley Bank Affects Indian Startups and the Country’s Startup Ecosystem

Silicon Valley Bank

Silicon Valley Bank (SVB), which was shut down by California banking regulators on March 10 following a run on the lender, had deposits from startups in India totalling almost $1 billion. At the end of 2022, the bank had assets worth $209 billion.

The bank became insolvent after depositors withdrew up to $42 billion in a single day. Eventually, the US government stepped in to make sure depositors could access their money. 

Rajeev Chandrashekhar, India’s state minister for technology, has met with more than 460 stakeholders in reaction to the SVB’s closure. It includes start-ups impacted by the bank’s collapse.

He recommended that Indian banks lend more to startups during a Twitter space discussion rather than relying on the convoluted international American banking system.

Chandrashekhar estimated that more than a billion dollars of capital from hundreds of Indian companies were held in SVB. Chandrashekhar advised that Indian banks provide businesses with funds in SVB with a deposit-backed credit line. Utilising those funds as collateral in order to assist these firms in adjusting to the Indian banking system.

Image containing logo of Silicon Vallay Bank- SVB

Chandrashekhar forwarded Nirmala Sitharaman, the finance minister, his recommendations.

With numerous firms obtaining support from foreign investors and posting multi-billion dollar valuations. In recent years, India has one of the largest startup markets in the world. The development of the nation’s startup ecosystem has been facilitated by the audacious bets that foreign investors have placed on digital and other innovative enterprises.

Chandrashekhar’s suggestions might make it possible for entrepreneurs in India to continue receiving the investment they require even during difficult times.

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