MUMBAI, March 12 (Reuters) – India’s technology minister said on Sunday he will meet start-ups this week to assess the impact on them of Silicon Valley Bank’s ( SIVB.O ) collapse, as concern over the fallout for the Indian growing startup sector.
California banking regulators shut down Silicon Valley Bank (SVB) on Friday after a run on the lender, which had $209 billion in assets at the end of 2022, with depositors withdrawing as much as $42 billion in a single day, making it insolvent.
“Startups are an important part of the new India’s economy. I will be meeting with Indian startups this week to understand the impact on them and how the government can help during the crisis,” Rajeev Chandrasekhar, the minister of state for IT, said on Twitter.
India has one of the world’s largest start-up markets, with many reaching multi-billion dollar valuations in recent years and backed by foreign investors who have made bold bets on digital and other technology companies.
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SVB’s failure, the biggest in the US since the 2008 financial crisis, has rattled global markets, hit bank stocks and is now unnerving Indian entrepreneurs.
Two partners at an Indian venture capital fund and a lender to Indian start-ups told Reuters they run checks with portfolio companies on any SVB exposure and, if so, whether it is a significant part of their overall bank balance.
Consumer internet startups, which have drawn the bulk of funding in India in recent years, are less affected because they either don’t have an SVB account or have minimal exposure to it, the three people said.
“Talked to some founders and it’s very bad,” Ashish Dave, CEO of Mirae Asset Venture Investments (India), wrote in a tweet.
“Especially for Indian founders … who set up their US companies and raised their seed round, SVB is the default bank. Uncertainty kills them. Growth is relatively safer since they diversified. Last thing founders needed.”
Software company Freshworks ( FRSH.O ) said it has minimal exposure to the SVB situation relative to the company’s overall balance sheet.
“As we grew, we acquired larger, diversified banks such as Morgan Stanley, JP Morgan and UBS. The vast majority of our cash and marketable securities today are not in SVB,” Freshworks said in a blog post, adding that the company anticipates no disruption to employees or customers.
Freshworks said it is working with customers and suppliers who used their SVB account to migrate to alternative bank accounts.
India’s Nazara Technologies Ltd ( NAZA.NS ), a mobile games company, said in a stock exchange filing that two of its subsidiaries, Kiddopia Inc and Mediawrkz Inc, have cash holdings totaling $7.75 million, or 640 million rupees, with SVB.
Reporting by M. Sriram and Munsif Vengattil; Writing by Swati Bhat; Additional reporting by Jahnavi Nidumolu; Editing by Alexander Smith and Sharon Singleton
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