“If India, the number of Indian startups [impacted] Y Combinator-backed startup Smriti Tomar, who had some money in SVB, says it’s definitely high compared to other nations, except for the US, but the capital is not that much. “Then what we can safely assume is that most startups have an exposure of between $250,000 and $1.5 million—that’s the bracket where most startups believe their money is blocked.”
Over the weekend, after SVB went down, hundreds of WhatsApp groups, communities and support forums popped up to see how people would react.
Many of them are clients of Krishna Startup Inc., which provides accounting and tax preparation products to companies registered with an Indian branch in the US. Krishna said on Thursday, March 9, most of his customers weren’t worried about their money, but on Friday, everyone started taking it more seriously. The biggest problem, he said, is that many of these founders don’t have secondary bank accounts and instead rely on SVB. Since then, founders have had to open dollar accounts at various banks, including GIFT City—India’s answer to Delaware in Gujarat, which offers non-resident and offshore accounts. This means that once they have access to funds in their SVB account, they will have an account to transfer them to.
Many startups were afraid of the business. Krishna told one of his clients that their entire account in India at SVB would run out of money within weeks – and that if the US did not bail out the bank, it would close and lay off its 100-person staff. “The founders were very, very concerned about this,” says Krishna.
She said Tomar, along with other founders, started looking at where they could cut corners to survive. “It was not a good situation to be in [in]. We were about to push that very cost-effective button.” she says.
Now she is waiting to see what happens. The U.S. government says SVB depositors in the U.S. will be protected and will be able to access their money again, although it is unclear when international remittances will resume.
However, the bank’s collapse means many startups in India are rethinking how they calculate their risks, and need to expand their banking relationships in the US and India – because no one saw this coming.
“I’ve been in Silicon Valley for 23 years and I’ve seen ups and downs, but for a large and influential bank to close in two days, with no precedent, no sign of slowing down, is unprecedented. ” said Anil Advani, founder and managing partner at global technology law firm Inventus Law, which had some money in SVB. “Including anyone. [the] SVB’s top management had any ideas. In fact, some of my friends told me. [because] The stock went down, looking to buy more shares on Wednesday last week.