India tech minister plans to meet startups on SVB fallout (updated)
12/03/2023 16:33
(Adds Freshworks statement)
MUMBAI, March 12 (Reuters) - India's state minister for
technology 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 concerns rise about the fallout for the Indian
start-up 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 pulling
out as much as $42 billion on a single day, rendering it
insolvent.
"Start-ups are an important part of the new India economy. I
will meet with Indian Startups this week to understand impact on
them and how the government can help during the crisis," Rajeev
Chandrasekhar, the state minister for IT said on Twitter.
India has one of the world's biggest start-up markets, with
many clocking multi-billion-dollar valuations in recent years
and getting the backing of foreign investors, who have made bold
bets on digital and other tech businesses.
SVB's failure, the biggest in the U.S. since the 2008
financial crisis, has roiled global markets, hit banking stocks
and is now unsettling Indian entrepreneurs.
Two partners at an Indian venture capital fund and one
lender to Indian start-ups told Reuters that they are running
checks with portfolio companies on any SVB exposure and if so,
whether it is a significant part of their total bank balance.
Consumer internet startups, which have drawn the bulk of
funding in India in recent years, are less affected because they
either do not have an SVB account or have minimal exposure to
it, the three people said.
"Spoke to some founders and it is very bad," Ashish Dave,
CEO of Mirae Asset Venture Investments (India), wrote in a
tweet.
"Especially for Indian founders ... who setup their U.S.
companies and raised their initial round, SVB is default bank.
Uncertainty is killing them. Growth ones are relatively safer as
they diversified. Last thing founders needed."
Software firm Freshworks FRSH.O said it has minimal
exposure to the SVB situation relative to the company's overall
balance sheet.
"As we grew, we brought on larger, diversified banks such as
Morgan Stanley, JP Morgan and UBS. The vast majority of our cash
and marketable securities today is not held at SVB," Freshworks
said in a blog post, adding that the company does not foresee
any disruption to employees or customers.
Freshworks said it is working with customers and vendors who
were using its SVB account to migrate to alternate bank
accounts.
India's Nazara Technologies Ltd NAZA.NS , a mobile gaming
company, said in a stock exchange filing that two of its
subsidiaries, Kiddopia Inc and Mediawrkz Inc, hold cash balances
totalling $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)
((swati.bhat@thomsonreuters.com; twitter.com/swatibhat22;
+91-22-69217812; Reuters Messaging:
swati.bhat.thomsonreuters.com@reuters.net))