The collapse of Silicon Valley Bank (SVB) in the United States has put some of the YCombinator-backed Indian start-up companies in trouble. These enterprises used to keep their cheques in SVB and now are reportedly struggling to manage the working capital.
According to a report by Moneycontrol, more than 60 per cent of the YCombinator-backed Indian start-ups deposited over $2,50,000 in SVB. These start-ups may find themselves in a troubled situation while carrying out their everyday affairs, as Garry Tan, the president and CEO of YCombinator said in an interview that one-third of its portfolio start-ups will be unable to make payrolls in the coming month.
“There are YCombinator companies that exclusively bank with Mercury, bank with Brex, bank with JP Morgan Chase, and other corporate banking partners. But I still feel the overwhelming majority of the US banks with SVB because they have such good inroads with the investor community,” Rahul J Mathur, the founder and CEO of Verak Insurance, said to Moneycontrol.
Addressing the crisis, Gaurav VK Singhvi, the co-founder of We Founder Circle, said, “SVB has been a preferred bank for a lot of Indian SaaS and Y Combinator-backed start-ups 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 being 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,” he added.