SVB Bank Failure

In News: India start-ups have recently seen panic over deposits, funding cloud after the collapse of Silicon Valley Bank (SVB)

About

• Silicon Valley Bank is the biggest customer of the tech industry, with a large number of Indian start-ups having accounts at the bank, especially in the SaaS sector.
• SVB had traditionally been the default banking partner for most start-ups because of its legacy in technology and experience of banking high-growth and high-burn companies.

Key Points:

• SVB had been an important lender to several Indian start-ups, including Paytm, Bluestone, and Carwale.
• A majority of the founders whose start-ups were incubated by the US-based technology start-up accelerator YCombinator (YC) had more than $250,000 with SVB.
• Crisis at the bank began after it sold substantially all of its available-for-sale securities at a $1.8-billion loss, mostly in the form of US Treasury securities.
• SVB had received a massive volume of deposits during the 2020-2021 tech boom and invested the proceeds into long-term Treasury bonds while interest rates were low.
• Post collapse, depositors with funds exceeding insurance caps will receive receivership certificates for their uninsured balances, meaning businesses with big deposits stuck in the bank are unlikely to get their money out soon.

https://indianexpress.com/article/business/funding-winter-indian-tech-industry-silicon-valley-bank-collapse-8490807/