Silicon Valley Bank's Collapse on Indian Start-ups Has a Silver Lining

During the period of crisis in Silicon Valley there seems to be a silver lining for the Indian start-ups that have been doing well. These start-ups may find the process of fund-raising rapidly comparatively accelerated owing to the SVB crisis. Similarly, venture capital firms and angel investors who were involved in long-drawn-out negotiations on valuations may garner deals turning in their favor as start-ups rush to raise funds.

Those start-ups that have operations in the US and money locked in the Silicon Valley Banks will face the heat since they will not be able to access more that $250,000, which is the amount insured. This will also make it challenging for such firms to make payroll as they struggle to raise money.

Gaurav VK Singhvi an Angel Investor and the Co-Founder of We Founder Circle said, "SVB has been a preferred bank for a lot of Indian SaaS and Y Combinator-backed startups operating with Silicon Valley Bank largely because of its flexibility and maintaining ease of fundraising operations. The news comes as a big shock and the shockwaves could have a limited impact on Indian startups directly and indirectly. Although many of the startups have already migrated their bank accounts to different banks. However, it is still advised to not withdraw deposits from the bank which makes sense as banks operate on limited reserves, but we have to understand that these startups operate on a very limited runway and the effects could be detrimental for them if they do not withdraw their funds on time." "The need to be resilient for Indian startups is now more than ever," he concluded.

There are some serial investors and angels that believe while the situation for Indian start-ups that have operations in the US is indeed grave, it is not as though all the start-ups will be hit by the SVB collapse. Mr. Jyoti Prakash Gadia the Managing Director at Resurgent India said, "The equity shareholders and promoters are the ones who would bear the brunt first. In the Indian context earlier we have earlier seen cases where the depositors were fully protected as in the case of Global Trust Bank where the bank itself was merged with another Public Sector Bank. The shareholders of course lose their money. Ultimately the Government/regulator will also decide if any bailout package will include the taxpayer's money which earlier happened in a few cases during the 2008 financial crisis."

Serial Entrepreneur and popular former Shark Tank India judge Ashneer Grover tweeted, "Eager to see how many VCs lose their jobs (yes they do jobs - are not founders and it's not their own money that they deploy) in the aftermath of SVB. VC space needed a cleanup for long. Ab number aayega inka - too stupid people have made too much easy money in VCs doing nothing."