Harvest Farmers Network CEO Ruchit G Garg says some of their money is stuck in SVB
New Delhi:
The collapse of Silicon Valley Bank, the main lender to US startups since the 1980s, has also affected a number of startups in India, affecting cash demand. their daily and other operating expenses. U.S. authorities broke into and seized the bank’s assets on Friday after deposits dried up leaving the mid-sized bank unable to sustain operations on its own.
Ruchit G Garg, chief executive officer of Harvesting Farmer Network, is one of a number of startup owners in India whose business has been impacted by the collapse of Silicon Valley Bank (SVB), the collapse of the Silicon Valley Bank. biggest fall since 2008 when Washington Mutual went bankrupt and died.
“We’ve been dealing with SVB for over 10 years. We have deposits that are currently stuck with them. Luckily for us, the situation has gotten a little better since most of our operations are off the grid. in India,” Mr. Garg told NDTV today.
“Just by sheer planning and luck, we got a lot of money from FDI (foreign direct investment) in Indian institutions,” he said. But still a big part of our money is in SVB.”
However, many other startups could be in much worse shape, Mr. Garg said, citing young companies that do most of their operations abroad, particularly in the US.
“Many startups are stuck with money in the SVB, the most serious are those operating in the US. If they mainly work in India, then they will also have deposits in Indian banks. The problem is even more serious for startups with SVB as the only main banking partner,” said Garg, who provides a mobile marketplace for more than 120 million farmers in India.
According to the bank’s website, at least 50% of life sciences and technology companies backed by US ventures have banking relationships with SVB. Several Indian startups also have deposits in SVB and investments from banks.
Mr. Garg distinguishes between debt- and equity-based investing to explain the impact of the collapse on Indian companies. He said companies that receive equity-based investments have received the amount invested, leaving little or no risk. But the risk is substantial for companies with debt-based investments from SVB.
For investments in the form of debt, the money will be deposited in the SVB, leaving it stranded after the bank collapses, Mr. Garg said.
Little known to the general public, SVB specializes in funding startups and has become the 16th largest US bank by assets: by the end of 2022, SVB has assets of $209 billion and approx. 175.4 billion USD in deposits.
Its collapse represents not only the biggest banking collapse since Washington Mutual in 2008, but also the second-biggest failure ever for a retail bank in the United States.
“The impact of SVB’s demise on startups in India is likely to be minimal,” Mr. Garg told NDTV. “Having to say, the SVB issue is shaking the market right now… It looks like it’s snowing in a few ways. Startups with some investments in the US and some in India Degrees won’t be hit hard… The negative impact could be that investments for some startups that are already tight globally will get tighter and tighter,” said Mr. Garg.
SVB’s surprisingly quick outburst has markets worried about a potential sign of widespread turmoil, but analysts see only a limited risk of financial contagion.
A note from analysts at Morgan Stanley put it simply: “We want to be clear here… we do not believe there is a liquidity crisis for the banking industry and most of it. the banks in our coverage all have access to ample liquidity.”
With input from AFP
