Silicon Valley Bank Collapses – Shatters The Valley Dream For Indian Startups?

Silicon Valley Bank Collapses – Shatters The Valley Dream For Indian Startups?

SUMMARY

The California Department of Financial Protection and Innovation shut down the Silicon Valley Bank after a possible takeover came into the news and startups started withdrawing the money and transferring it to other banks

For Indian startups registering in the US, one of the USPs which SVB used to bring to the table was to allow them to register without a social security number

In case of acquisition by another bank, it’s not necessary that the bank might onboard businesses/customers without social security numbers, this would give jolt to Indian founders

Within 24 hours, the US-based Silicon Valley Bank has given another shock to the startup ecosystem globally. While the industry was identifying solutions to escape the panic mode and help startups wire money to different accounts, the California Department of Financial Protection and Innovation shut down the bank.With this move, FDIC aims to bring some control to the panic-driven market. On March 8, the bank sold all of its Available for Sale (AFS) securities portfolio worth $21 Bn (at a loss of $1.8 Bn), which panicked the capital markets.At the same time, there is a high possibility that withdrawals will continue to increase when bank transactions are reopened on Monday. If the situation worsens, Silicon Valley Bank could take another hit.“This is really a bad situation. Even if the bank is able to revive itself, the trust has gone for a long time which will be difficult to revive,” Sanghvi added.

According to an official release, all insured depositors will have full access to their insured deposits no later than Monday morning, March 13, 2023.

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