Collapse of Silicon Valley Bank to impact Indian startup ecosystem, feel experts
Washington (PTI): The collapse of Silicon Valley Bank, the largest vendor in the startup ecosystem, is likely to adversely impact the Indian startup scenario as well as it has injected a lot of uncertainty in the sector overnight, industry experts say.
"Hopefully the matter will get resolved, but I think it is a big hit for Indian startups," Ashu Garg, a prominent Silicon Valley-based venture capitalist and early-stage investor for over two decades, told PTI in an interview.
California-based Silicon Valley Bank (SVB), the 16th largest bank in the United States, was closed on Friday by the California Department of Financial Protection and Innovation which later appointed the Federal Deposit Insurance Corporation (FDIC) as its receiver.
The FDIC, in a statement, said as of December 31, 2022, the Silicon Valley Bank had approximately USD 209.0 billion in total assets and about USD 175.4 billion in total deposits. At the time of closing, the amount of deposits in excess of the insurance limits was undetermined. The number of uninsured deposits will be determined once the FDIC obtains additional information from the bank and customers.
"The reality is that the Silicon Valley Bank has been a real supporter of the Indian startup scene and has provided banking services. Most Indian startups that do business in the US use this bank because it is one of the few institutes willing to work with the Indian banks. A lot of the banking institutes do not want to work with overseas customers," Garg, an alumnus of IIT Delhi, said.
"So, SVB has been able to work with the Indian companies that do not have US employees. So if they (are gone), it will be very problematic for the Indian (companies)," he said in response to a question.
Over the past several years, SVB has been one of the most preferred choices of banking for startups and tech industry in the Silicon Valley, mainly because of its understanding of the industry and flexibility in many aspects suiting the startup ecosystem.
Given that every third startup in the Silicon Valley is founded by Indian-Americans, experts feel a significantly large number of these founders would be impacted as early as next week in terms of even making basic payments and giving paychecks to their employees.
Similarly, a large number of Indian startups which do not have even an employee or an office in the US had opened up their accounts in the Silicon Valley Bank as it let them do so without much regulatory questions and with a customer-friendly approach.
The implications of the collapse of SVB on Indian-Americans and their companis are very serious, Garg said.
"The Silicon Valley Bank is the largest vendor to the startup ecosystem. So now you have all these loans. You do not know what is going to happen if the loans get sold and get called.
"Besides, a lot of fintech also depends on the Silicon Valley Bank... So you probably saw Rippling, which is a payroll company, unable to issue payroll because their underlying bank is the Silicon Valley Bank. It also has potential implications for the banking system in the US and the rest of the world," the venture capitalist said.
A group of Silicon Valley-based venture capitalists after a meeting to discuss the aftermath of the bank's downfall said the events that unfolded over the past 48 hours have been deeply disappointing and concerning.
"In the event that SVB was to be purchased and appropriately capitalised, we would be strongly supportive and encourage our portfolio companies to resume their banking relationship with them," it said in a joint statement released by Indian-American Navin Chaddha, an early stage investor.
" SVB has been an early partner for many of our companies at Battery Ventures through the ups and downs of company building. The last 48 hours unfolded in ways we could have never imagined, but now is the time to back our partners and we strongly support our companies working with SVB as and when we have more clarity on their path forward," he said.
Indian-American Congressman Ro Khanna, who represents Silicon Valley in the House of Representatives, said the FDIC needs to investigate short sales over the past few months by executives, and at minimum, there should be a clawback with penalties of profits made.
"This should go to non-profits like Sunnyvale Community Services who are worried about losing SVB deposits and paying mortgages," he demanded.
Indian-American presidential candidate Vivek Ramaswamy said the American taxpayers should not bail out the likes of Prince Harry and Meghan Markle.
"If you want to make deposits at the Silicon Valley Bank, that is your business. But I did not hear the tech industry's intelligentsia calling for bailouts of East Palestine last month," he said.
Meanwhile, Indian-American Rohit Chopra, the director of the Consumer Financial Protection Bureau, is tasked with protecting the consumers interest in the case. He is also one of the FDIC directors.
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Delhi Polls: BJP faces protest, placates MLA amid resentment over ticket distribution
New Delhi, Jan 12: Resentment surfaced in the BJP on Sunday over ticket distribution for Delhi Assembly polls, with a protest held outside its Delhi unit office and an angry outburst by the outgoing MLA from Karawal Nagar who was not included in the candidate list released a day earlier.
As MLA Mohan Singh Bisht threatened to revolt after being denied a ticket from Karawal Nagar, the party rushed to control the damage and announced his candidature from the Mustafabad seat this evening.
A group of protesters from Tughlakabad in South Delhi held a dharna at the gate of the Delhi BJP office, demanding a change in the candidate from the constituency.
"Vikram Bidhuri Tum Sangharsh Karo; Modi Se Bair Nahi, Rohtas Teri Khair Nahi," the protesters, including mostly youngsters, chanted as the party leaders tried to pacify them.
In the second list of BJP candidates for the polls declared on Saturday, Rohtas Bidhuri was fielded from the Tughlakabad seat. In 2020 Assembly polls, Vikram Bidhuri who is a relative of senior party leader Ramesh Bidhuri, lost to AAP's Sahiram by over 13,000 votes.
A similar protest was also held by some party workers outside the Delhi BJP office against Mehrauli candidate Gajainder Yadav after the announcement of the first list of candidates earlier this month.
Bisht, the senior-most BJP MLA in the outgoing Assembly elected five times from Karawal Nagar, openly expressed unhappiness over being denied the ticket to contest from his stronghold.
A senior party leader said he was pacified after a meeting with BJP chief JP Nadda.
Bisht, after getting the ticket from Mustafabad, expressed confidence that he would win the seat for the BJP.
"I met the national president and things were ironed out. I have assured that I will contest from Mustafabad and win the seat for the party," Bisht told PTI.
The MLA said he and the BJP had considerable support in Mustafabad and he has already attended two public meetings there.
The BJP won the Mustafabad seat, having a significant minority community presence, in the 2015 Assembly polls but lost it to Aam Aadmi Party (AAP) in 2020.
Earlier in the day, Bisht told PTI that the party's decision to replace him with Kapil Mishra was "wrong" and its consequences will be visible after voting on February 5.
"You have challenged the 'samaj' (his Uttarakhandi community), not Mohan Singh Bisht. The BJP will lose at least 8-10 seats because of this decision, including Karawal Nagar, Burari, Mustafabad and Gokalpuri," Bisht warned.
The BJP fielded Kapil Mishra, a Hindutva hardliner, from Karwal Nagar in North East Delhi, which was rocked by massive communal violence just after the 2020 Assembly polls.
Sources in the party claimed that there was also "deep resentment" among the Delhi BJP's Scheduled Castes Morcha leaders over being denied tickets from different constituencies including Madipur and Kondli.
A top Delhi BJP functionary stressed that there are many ticket aspirants, so it is natural for those who did not get selected to feel disappointed.
"The BJP is a disciplined party and its leaders understand this. Sooner or later, everyone will realise this and work for the victory of the party giving up their resentment," he said.
The elections to 70 Assembly seats in Delhi are scheduled on February 5. Results will be out after the counting of votes on February 8.
The BJP, out of power in Delhi since 1998, is making all-out efforts to return to power. In the 2015 and 2020 Assembly polls, the party was completely routed by the AAP, scraping through with just three and eight seats, respectively.
