Biden Administration’s Stance On Silicon Valley Bank Reassuring For Indian Startups: Nasscom

Nasscom, India’s top IT industry body, has welcomed the announcement by the Joe Biden administration that depositors of failed Silicon Valley Bank (SVB) will have access to their money. This decision is a reassuring move for Indian startups who have invested funds in the bank. The bank’s closure marked one of the largest bank failures since the 2008 global financial crisis, as many of the venture capital firms and VC-backed companies the bank had cultivated over time began pulling out their deposits, creating a run on the bank.

Nasscom’s Senior Vice President and Chief Strategy Officer Sangeeta Gupta stated that the US administration’s announcement will address the immediate financial issues that Indian startups had been grappling with. The bank was deeply entrenched in the tech startup ecosystem and served as the default bank for many high-flying startups.

Experts have said that companies will now be much more vigilant and careful about how they park their funds, and may choose to distribute their deposits across multiple accounts and banks to safeguard their money and mitigate risks.

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Meanwhile, Gaurav VK Singhvi, Co-Founder at We Founder Circle, said that SVB has been a reliable and go-to bank for many Indian SaaS (Software as a Service) and Y Combinator-backed startups owing to its versatility, adaptability and convenience. of fundraising activities. However, he added that SVB’s clients have been struggling for cash over the past year, and with the restricted runway, the consequences could be hugely damaging if they do not withdraw their cash on time for payroll and other operational purposes.

The last few days have been stressful for startups and companies who had exposure to SVB, and the US government’s statement has signaled relief for those who were left in a lurch after desperate last-minute attempts to withdraw deposits were unsuccessful last week. There will, however, be a wait-and-watch on how long the entire process will take.

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Established in 2020 in Mumbai, We Founder Circle (WFC) is a global community of founders and strategic angels that have come together to push the startup industry and steer it towards a robust growth path. WFC provides seed funding, business development, and global networking opportunities to startups, as it believes early-stage ventures need a lot beyond just financial support to become scalable and stable. Since its incorporation, WFC has enabled USD 20 million worth of investments across 100-plus startup deals.

Overall, the decision of the US administration to protect depositors of SVB has provided reassurance to Indian startups who have invested funds in the bank. It is expected that companies will now become more vigilant and cautious when it comes to how they park their funds, and may opt to distribute their deposits across multiple accounts and banks to safeguard their money and mitigate risks.