The trading is now halted on SVB stock, and the bank is in talks with large financial institutions for a potential takeover
Ever since the news has gone viral, many Indian neobanks have come forward to help Indian startups open their accounts in other US banks or get their money transferred to Indian accounts
Experts believe that the Indian startup ecosystem won't have much impact of the fiasco, as most companies park their funds in two to three banks and liquid investment options
Read Our Latest Coverage On — Silicon Valley Bank Collapse And How It Might Shatter The Valley Dream For Indian Startups?“We are taking these actions because we expect continued higher interest rates, pressured public and private markets, and elevated cash-burn levels from our clients as they invest in their businesses,” SVB’s CEO Greg Becker said in a letter to shareholders on Wednesday.“Its 3 AM here and we have been working round the clock to ensure that we are able to help Indian founder open new US bank accounts on Truly Financial. Because of the regulations, we cannot disclose the names of the companies, but panic is definitely there and people are moving money in fear,” TrulyFinancial’s cofounder Kanchan Kumar told Inc42.“If everyone is telling each other that SVB is in trouble, that will be a challenge,” said Becker during a zoom call.Simplifying this further, Loginext cofounder Dhruvil Sanghvi explained this is just like an FD one buys for 10 years at an annualised rate. In the last 12 months, the Federal Reserve has been consistently increasing its interest rates, which has gone up to 4-5%, which basically makes MBF an unattractive investment instrument.“When the company itself sells so much stock at one shot, it typically creates market panic that something is wrong, and then more and more people start selling. Based on that, all venture funds are advising their companies not to park their money in SVB bank, as if the situation escalates, it may lead to more loss due to trickle-down effect,” Sanghvi added.“Everyone is taking money out. US-based fintechs Brex, Mercury, Meow, and UBS might’ve added a few billions last night to their valuation,” sources said.“Overall, while the situation with SVB is undoubtedly unfortunate, it is also an opportunity for the industry to learn and improve. Of course, as investors, we must remain vigilant and diligent in our due diligence, but we can also stay optimistic about the long-term prospects of the financial sector,” added Damani.
Silicon Valley Bank (SVB), an American commercial bank, has kept a lot of Indian tech startups on tenterhooks in the last 24 hours. As part of its Q1 2023 strategic actions update shared on March 8, the bank sold substantially all of its Available for Sale (AFS) securities portfolio worth $21 Bn, resulting in a loss of $1.8 Bn and a panic attack on the public markets.