GoI to meet Indian startups affected by SVB’s closure
- ByStartupStory | March 13, 2023
The recent crisis at the Silicon Valley Bank (SVB) has garnered the attention of government officials following complaints from several Indian startups on social media. Rajeev Chandrasekhar, the Minister of State for Skill Development and Entrepreneurship and Electronics and Information Technology, acknowledged the negative effects on these startups on Sunday.
In response to the impact of SVB’s closure on startups worldwide, Rajeev Chandrasekhar expressed his concern on Twitter, stating that “startups are a crucial part of India’s new economy. He also announced plans to meet with Indian startups later in the week to better understand the situation and explore ways in which the Narendra Modi government can provide assistance during this crisis”.
On March 10, California regulators closed down SVB, a US-based bank that serves venture capital and private equity funds, startups, and technology companies, after it lost almost 60% of its market capitalization due to an announcement to sell $1.75 billion worth of shares. The Federal Deposit Insurance Corporation (FDIC) has taken over as the receiver and has allowed account holders to withdraw up to $250,000, depending on their account balance.
Indian startups that have US parent entities have turned to social media to draw attention to the challenges they face due to the withdrawal limits on their SVB accounts. This move is expected to cause a liquidity and working capital shortage, which will have a direct impact on payroll and jobs. Furthermore, many startups that are part of the startup accelerator program Y Combinator have been heavily affected, as a substantial number of them have banking relationships with SVB.
Prior to the bank’s shutdown, various venture capital and private equity firms had advised their portfolio companies to withdraw funds from their SVB accounts.
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