The sudden collapse of Silicon Valley Bank, the lifeblood of startups, has affected businesses 8,000 miles away.
Dozens of young Indian start-ups backed by YC, Accel, Sequoia India, Lightspeed, SoftBank, Bessemer Venture Partners, etc. bank with Silicon Valley banks, sometimes as sole banking partners, withdrawing money on time I couldn’t. He said he was familiar with the situation.
VCs are wary of revealing the names of affected startups. This is because they fear it will affect the future funding prospects of young companies. Regulators stepped in on Friday to shut down Silicon Valley Bank, the 16th largest and most start-up bank in the United States.
Some Indian companies were unable to move funds out of Silicon Valley banks in a timely manner because they did not have another US bank account readily available, many venture capitalists said.
Many Indian startups are docked in Delaware to facilitate funding from US ventures such as Y Combinator. Some SaaS companies are registered in the US because they want to serve the international market and be seen as a US company, even though they operate in India.
Silicon Valley Bank was also the favored choice for many companies that had “flipped” their home base from India to the United States, another person familiar with the matter said, citing a number of SVB-sponsored events. .
Nearly all Indian SaaS startups with a large presence in the US use Silicon Valley Bank, says a partner of one of the top venture funds. Over a dozen of his SaaS unicorns in India and many more “Soonikorn” are headquartered in the US.
Many of these young companies never diversified their funds across multiple banks. In the early stages, it is usually not practical to increase administrative and operational costs.
A U.S.-based investor, who requested anonymity to speak candidly, said he was aware of the fact that many Indian companies have about $4 million to $10 million in SVB accounts. A group of his YC founders in India surveyed members about their exposure to his SVB, according to TechCrunch-confirmed results, and more than 60 companies have deposited more than $250,000 of hers in her SVB. It turns out that there is
Indian SaaS startups and YC-backed companies that set up companies in the US and raised their first funding there often used SVB as their default bank. murmured“Uncertainty is killing them. Growth stocks are diversified, so they’re relatively safe.”
Garry Tan, president of Y Combinator, said more than 1,000 YC-backed startups were affected by the collapse of Silicon Valley Bank. “His 30% of his YC companies exposed through SVB will not be able to pay their salaries in the next 30 days,” he tweeted.
The story will be updated as we learn more.
