India’s tech minister to meet startups on SVB fallout

The meeting will assess the impact on the sector from the lender’s collapse.

MUMBAI: India’s state minister for technology said on Sunday he will meet startups this week to assess the impact on them of Silicon Valley Bank’s collapse, as concerns rise about the fallout for the Indian startup sector.

California banking regulators shut down Silicon Valley Bank (SVB) on Friday after a run on the lender, which had US$209 billion in assets at the end of 2022, with depositors pulling out as much as US$42 billion on a single day, rendering it insolvent.

“Start-ups are an important part of the new India economy. I will meet with Indian startups this week to understand impact on them and how the government can help during the crisis,” Rajeev Chandrasekhar, the state minister for IT said on Twitter.

India has one of the world’s biggest start-up markets, with many clocking multi-billion-dollar valuations in recent years and getting the backing of foreign investors, who have made bold bets on digital and other tech businesses.

SVB’s failure, the biggest in the US since the 2008 financial crisis, has roiled global markets, hit banking stocks and is now unsettling Indian entrepreneurs.

Two partners at an Indian venture capital fund and one lender to Indian startups told Reuters that they are running checks with portfolio companies on any SVB exposure and if so, whether it is a significant part of their total bank balance.

Consumer internet startups, which have drawn the bulk of funding in India in recent years, are less affected because they either do not have an SVB account or have minimal exposure to it, the three people said.

“Spoke to some founders and it is very bad,” Ashish Dave, CEO of Mirae Asset Venture Investments (India), wrote in a tweet.

“Especially for Indian founders … who setup their US companies and raised their initial round, SVB is default bank. Uncertainty is killing them. Growth ones are relatively safer as they diversified. Last thing founders needed.”

Software firm Freshworks said it has minimal exposure to the SVB situation relative to the company’s overall balance sheet.

“As we grew, we brought on larger, diversified banks such as Morgan Stanley, JP Morgan and UBS. The vast majority of our cash and marketable securities today is not held at SVB,” Freshworks said in a blog post, adding that the company does not foresee any disruption to employees or customers.

Freshworks said it is working with customers and vendors who were using its SVB account to migrate to alternate bank accounts.

India’s Nazara Technologies Ltd, a mobile gaming company, said in a stock exchange filing that two of its subsidiaries, Kiddopia Inc and Mediawrkz Inc, hold cash balances totalling US$7.75 million or 640 million Indian rupees with SVB.