US Silicon Valley Bank collapse is impacting many Indian startups, The story behind the largest financial crisis in US after 2008

[beijingwalker]

US Silicon Valley Bank collapse is impacting many Indian startups​

Manish Singh@refsrc / 5:21 PM GMT+8•March 11, 2023

Over 60 YC-backed Indian startups have more than $250,000 stuck in accounts with Silicon Valley Bank and nearly two dozen have more than $1 million tied with the lender, according to a survey by and among the startups seen by TechCrunch, illustrating how the worst bank failure since the 2008 financial crisis is also impacting firms 8,000 miles away.

Dozens of young Indian startups backed by the likes of YC, Accel, Sequoia India, Lightspeed, SoftBank and Bessemer Venture Partners banked with Silicon Valley Bank, sometimes as their only banking partner, and couldn’t take out the money on time on Thursday, multiple people familiar with the situation said.

VCs are cautious about divulging the names of the impacted startups out of fear that it might impede the young firms’ prospects of raising capital in the future. Regulators stepped in Friday to shut down Silicon Valley Bank, the 16th largest in the U.S. and lifeblood for startups, citing “inadequate liquidity and insolvency.” The Federal Deposit Insurance Corporation will work to recover “the maximum amount possible from the disposition of assets,” it says on its website.

Some Indian firms couldn’t timely yank their deposits from Silicon Valley Bank because they didn’t have another US banking account readily available to hold that capital, many venture capitalists recounted.

Many Indian startups are incorporated in Delaware to make it easier for them to raise capital from U.S. venture firms such as Y Combinator. Some SaaS firms are registered in the U.S. because even as they operate from India, they want to serve the international markets and want to be seen as a US-firm.

Moreover, many firms that “flipped” their home base to the U.S. from India, Silicon Valley Bank was the preferred choice, another person familiar with the matter said, pointing to the fact that many events in India were sponsored by SVB as the lender’s executives pushed to increase ties with Indian firms.

Nearly all Indian SaaS startups with large presence in the U.S. banked with Silicon Valley Bank, a partner at one of the top venture funds said. Over a dozen Indian SaaS unicorns and many more “soonicorns” are headquartered in the U.S.

Many of these young firms did not diversify their funds into multiple banks because in the early days of a firm, operators tend to avoid increasing admin costs. A U.S.-based investor, who requested anonymity speaking candidly, said he knew for a fact that many Indian firms had about $4-10 million parked in their SVB accounts.

Indian SaaS startups and otherwise those backed by YC who set up their companies in the U.S. and raised their maiden round there often had SVB as their default bank, Ashish Dave, India head of Mirae Asset, tweeted. “Uncertainty is killing them. Growth ones are relatively safer as they diversified.”

Garry Tan, the president of Y Combinator, said more than a 1,000 YC-backed startups are impacted by the collapse of Silicon Valley Bank. “30% of YC companies exposed through SVB can’t make payroll in the next 30 days,” he tweeted.

https://twitter.com/x/status/1634473273479278592

https://twitter.com/x/status/1634387896861081600

Silicon Valley Bank collapse is impacting many Indian startups | TechCrunch

The sudden collapse of Silicon Valley Bank, which served as lifeblood for startups, is also impacting firms 8,000 miles away.

techcrunch.com

 

[beijingwalker]

Why did Silicon Valley Bank fail? The story behind the largest financial crisis in US after 2008​

ET Online | 11 Mar 2023, 06:08 PM IST

Why did Silicon Valley Bank fail? The story behind the largest financial crisis in US after 2008

The largest financial crisis since the 2008 crash, SVB’s announcement has unnerved the tech investment ecosystem and prominent venture capitalists everywhere. Here’s a deep dive into what happened. Watch!

economictimes.indiatimes.com

Silicon Valley Bank shut down, second-biggest bank collapse in U.S. history | LiveNOW from FOX​

 

[beijingwalker]

Instead of being hell bent to bring a tech war on China, US should care more about fire burning at home.

 

[Al_Muhannad]

The great indian bloatedness

 

[nahtanbob]

US Silicon Valley Bank collapse is impacting many Indian startups​

Manish Singh@refsrc / 5:21 PM GMT+8•March 11, 2023

Over 60 YC-backed Indian startups have more than $250,000 stuck in accounts with Silicon Valley Bank and nearly two dozen have more than $1 million tied with the lender, according to a survey by and among the startups seen by TechCrunch, illustrating how the worst bank failure since the 2008 financial crisis is also impacting firms 8,000 miles away.

Dozens of young Indian startups backed by the likes of YC, Accel, Sequoia India, Lightspeed, SoftBank and Bessemer Venture Partners banked with Silicon Valley Bank, sometimes as their only banking partner, and couldn’t take out the money on time on Thursday, multiple people familiar with the situation said.

VCs are cautious about divulging the names of the impacted startups out of fear that it might impede the young firms’ prospects of raising capital in the future. Regulators stepped in Friday to shut down Silicon Valley Bank, the 16th largest in the U.S. and lifeblood for startups, citing “inadequate liquidity and insolvency.” The Federal Deposit Insurance Corporation will work to recover “the maximum amount possible from the disposition of assets,” it says on its website.

Some Indian firms couldn’t timely yank their deposits from Silicon Valley Bank because they didn’t have another US banking account readily available to hold that capital, many venture capitalists recounted.

Many Indian startups are incorporated in Delaware to make it easier for them to raise capital from U.S. venture firms such as Y Combinator. Some SaaS firms are registered in the U.S. because even as they operate from India, they want to serve the international markets and want to be seen as a US-firm.

Moreover, many firms that “flipped” their home base to the U.S. from India, Silicon Valley Bank was the preferred choice, another person familiar with the matter said, pointing to the fact that many events in India were sponsored by SVB as the lender’s executives pushed to increase ties with Indian firms.

Nearly all Indian SaaS startups with large presence in the U.S. banked with Silicon Valley Bank, a partner at one of the top venture funds said. Over a dozen Indian SaaS unicorns and many more “soonicorns” are headquartered in the U.S.

Many of these young firms did not diversify their funds into multiple banks because in the early days of a firm, operators tend to avoid increasing admin costs. A U.S.-based investor, who requested anonymity speaking candidly, said he knew for a fact that many Indian firms had about $4-10 million parked in their SVB accounts.

Indian SaaS startups and otherwise those backed by YC who set up their companies in the U.S. and raised their maiden round there often had SVB as their default bank, Ashish Dave, India head of Mirae Asset, tweeted. “Uncertainty is killing them. Growth ones are relatively safer as they diversified.”

Garry Tan, the president of Y Combinator, said more than a 1,000 YC-backed startups are impacted by the collapse of Silicon Valley Bank. “30% of YC companies exposed through SVB can’t make payroll in the next 30 days,” he tweeted.

https://twitter.com/x/status/1634473273479278592

https://twitter.com/x/status/1634387896861081600

Silicon Valley Bank collapse is impacting many Indian startups | TechCrunch

The sudden collapse of Silicon Valley Bank, which served as lifeblood for startups, is also impacting firms 8,000 miles away.

techcrunch.com

a piece of news forgotten by our resident Goebellian CCP bot

U.S. government steps in and says people with funds deposited at SVB will be able to access their money

Banking regulators devised a plan Sunday to shore up deposits at Silicon Valley Bank, a critical step in stemming a feared panic.

www.cnbc.com

Instead of being hell bent to bring a tech war on China, US should care more about fire burning at home.

U.S. government steps in and says people with funds deposited at SVB will be able to access their money​

KEY POINTS

• Regulators approved plans Sunday to backstop both depositors and financial institutions associated with Silicon Valley Bank.
• Officials will unwind both SVB and Signature Bank, ensuring that depositors will have full access to their funds on Monday.
• The Federal Reserve stepped in with a separate facility that will provide loans up to one year for institutions affected by the bank failures.
• “Today we are taking decisive actions to protect the U.S. economy by strengthening public confidence in our banking system,” leading regulators said in a joint statement.

Banking regulators devised a plan Sunday to backstop depositors with money at Silicon Valley Bank, a critical step in stemming a feared systemic panic brought on by the collapse of the tech-focused institution.

Depositors at both failed SVB and Signature Bank in New York, which was shuttered Sunday over similar systemic contagion fears, will have full access to their deposits as part of multiple moves that officials approved over the weekend. Signature had been a popular funding source for cryptocurrency companies.

Those with money at the bank will have full access starting Monday.

The Treasury Department designated both SVB and Signature as systemic risks, giving it authority to unwind both institutions in a way that it said “fully protects all depositors.” The FDIC’s deposit insurance fund will be used to cover depositors, many of whom were uninsured due to the $250,000 cap on guaranteed deposits.

Along with that move, the Federal Reserve also said it is creating a new Bank Term Funding Program aimed at safeguarding institutions affected by the market instability of the SVB failure.

A joint statement from the various regulators involved said there would be no bailouts and no taxpayer costs associated with any of the new plans. Shareholders and some unsecured creditors will not be protected and will lose all of their investments.

“Today we are taking decisive actions to protect the U.S. economy by strengthening public confidence in our banking system,” said a joint statement from Federal Reserve Chair Jerome Powell, Treasury Secretary Janet Yellen and FDIC Chair Martin Gruenberg.




The Fed facility will offer loans of up to one year to banks, saving associations, credit unions and other institutions. Those taking advantage of the facility will be asked to pledge high-quality collateral such as Treasurys, agency debt and mortgage-backed securities.

“This action will bolster the capacity of the banking system to safeguard deposits and ensure the ongoing provision of money and credit to the economy,” the Fed said in a statement. “The Federal Reserve is prepared to address any liquidity pressures that may arise.”

The Treasury Department is providing up to $25 billion from its Exchange Stabilization Fund as a backstop for any potential losses from the funding program. A senior Fed official said the Treasury program likely won’t be needed and will exist only as a safeguard.

The same official expressed confidence the various moves would shore up confidence in the financial system, providing funding guarantees and liquidity considered essential during financial crises.

Along with the facility, the Fed said it will ease conditions at its discount window, which will use the same conditions as the BTFP. However, the new facility offers more favorable terms, with a longer duration of loans of one year vs. 90 days. Also, securities will be valued at par value rather than the market value assessed at the discount window.

The haircut, or reduction in principal, issue is critical as there are estimated to be some $600 billion in unrealized losses that institutions possess in held-to-maturity Treasurys and mortgage-backed securities.

“This should be enough to stop any contagion from spreading and taking down more banks, which can happen in the blink of an eye in the digital age,” Paul Ashworth, chief North America economist at Capital Economics, said in a client note. “But contagion has always been more about irrational fear, so we would stress that there is no guarantee this will work.”

Markets reacted positively to the developments, with futures tied to the Dow Jones Industrial Average leaping more than 300 points in early trading. Cryptocurrency prices also rallied strongly, with bitcoin up more than 7%.

The rescue plans rekindled memories of the financial crisis, but Yellen said Sunday morning that there would be no SVB bailout.

“We’re not going to do that again. But we are concerned about depositors and are focused on trying to meet their needs,” Yellen said on CBS’ “Face the Nation.”

President Joe Biden praised Sunday’s initiatives but indicated there would be consequences from the crisis.

“I am firmly committed to holding those responsible for this mess fully accountable and to continuing our efforts to strengthen oversight and regulation of larger banks so that we are not in this position again,” Biden said.

The SVB failure was the nation’s largest collapse of a financial institution since Washington Mutual went under in 2008.

The dramatic moves come just days after SVB, a key financing hub for tech companies, reported that it was struggling, triggering a run on the bank’s deposits.

Authorities had spent the weekend looking for a larger institution to buy SVB, but came up short. PNC was one interested buyer but backed out, a source told CNBC’s Sara Eisen.

A senior Treasury official said Sunday evening that a sale is still possible for Silicon Valley Bank. The initiatives Sunday were done to head off further potential problems.

The scenario harkened back to the Sept. 15, 2008 collapse of investment banking giant Lehman Brothers, which also found itself insolvent and in search of a buyer. The government also was unsuccessful in that case following a weekend of wrangling, triggering the worst of the Global Financial Crisis.

 

[beijingwalker]

a piece of news forgotten by our resident Goebellian CCP bot

U.S. government steps in and says people with funds deposited at SVB will be able to access their money

Banking regulators devised a plan Sunday to shore up deposits at Silicon Valley Bank, a critical step in stemming a feared panic.

www.cnbc.com

U.S. government steps in and says people with funds deposited at SVB will be able to access their money​

KEY POINTS

• Regulators approved plans Sunday to backstop both depositors and financial institutions associated with Silicon Valley Bank.
• Officials will unwind both SVB and Signature Bank, ensuring that depositors will have full access to their funds on Monday.
• The Federal Reserve stepped in with a separate facility that will provide loans up to one year for institutions affected by the bank failures.
• “Today we are taking decisive actions to protect the U.S. economy by strengthening public confidence in our banking system,” leading regulators said in a joint statement.

Banking regulators devised a plan Sunday to backstop depositors with money at Silicon Valley Bank, a critical step in stemming a feared systemic panic brought on by the collapse of the tech-focused institution.

Depositors at both failed SVB and Signature Bank in New York, which was shuttered Sunday over similar systemic contagion fears, will have full access to their deposits as part of multiple moves that officials approved over the weekend. Signature had been a popular funding source for cryptocurrency companies.

Those with money at the bank will have full access starting Monday.

The Treasury Department designated both SVB and Signature as systemic risks, giving it authority to unwind both institutions in a way that it said “fully protects all depositors.” The FDIC’s deposit insurance fund will be used to cover depositors, many of whom were uninsured due to the $250,000 cap on guaranteed deposits.

Along with that move, the Federal Reserve also said it is creating a new Bank Term Funding Program aimed at safeguarding institutions affected by the market instability of the SVB failure.

A joint statement from the various regulators involved said there would be no bailouts and no taxpayer costs associated with any of the new plans. Shareholders and some unsecured creditors will not be protected and will lose all of their investments.

“Today we are taking decisive actions to protect the U.S. economy by strengthening public confidence in our banking system,” said a joint statement from Federal Reserve Chair Jerome Powell, Treasury Secretary Janet Yellen and FDIC Chair Martin Gruenberg.




The Fed facility will offer loans of up to one year to banks, saving associations, credit unions and other institutions. Those taking advantage of the facility will be asked to pledge high-quality collateral such as Treasurys, agency debt and mortgage-backed securities.

“This action will bolster the capacity of the banking system to safeguard deposits and ensure the ongoing provision of money and credit to the economy,” the Fed said in a statement. “The Federal Reserve is prepared to address any liquidity pressures that may arise.”

The Treasury Department is providing up to $25 billion from its Exchange Stabilization Fund as a backstop for any potential losses from the funding program. A senior Fed official said the Treasury program likely won’t be needed and will exist only as a safeguard.

The same official expressed confidence the various moves would shore up confidence in the financial system, providing funding guarantees and liquidity considered essential during financial crises.

Along with the facility, the Fed said it will ease conditions at its discount window, which will use the same conditions as the BTFP. However, the new facility offers more favorable terms, with a longer duration of loans of one year vs. 90 days. Also, securities will be valued at par value rather than the market value assessed at the discount window.

The haircut, or reduction in principal, issue is critical as there are estimated to be some $600 billion in unrealized losses that institutions possess in held-to-maturity Treasurys and mortgage-backed securities.

“This should be enough to stop any contagion from spreading and taking down more banks, which can happen in the blink of an eye in the digital age,” Paul Ashworth, chief North America economist at Capital Economics, said in a client note. “But contagion has always been more about irrational fear, so we would stress that there is no guarantee this will work.”

Markets reacted positively to the developments, with futures tied to the Dow Jones Industrial Average leaping more than 300 points in early trading. Cryptocurrency prices also rallied strongly, with bitcoin up more than 7%.

The rescue plans rekindled memories of the financial crisis, but Yellen said Sunday morning that there would be no SVB bailout.

“We’re not going to do that again. But we are concerned about depositors and are focused on trying to meet their needs,” Yellen said on CBS’ “Face the Nation.”

President Joe Biden praised Sunday’s initiatives but indicated there would be consequences from the crisis.

“I am firmly committed to holding those responsible for this mess fully accountable and to continuing our efforts to strengthen oversight and regulation of larger banks so that we are not in this position again,” Biden said.

The SVB failure was the nation’s largest collapse of a financial institution since Washington Mutual went under in 2008.

The dramatic moves come just days after SVB, a key financing hub for tech companies, reported that it was struggling, triggering a run on the bank’s deposits.

Authorities had spent the weekend looking for a larger institution to buy SVB, but came up short. PNC was one interested buyer but backed out, a source told CNBC’s Sara Eisen.

A senior Treasury official said Sunday evening that a sale is still possible for Silicon Valley Bank. The initiatives Sunday were done to head off further potential problems.

The scenario harkened back to the Sept. 15, 2008 collapse of investment banking giant Lehman Brothers, which also found itself insolvent and in search of a buyer. The government also was unsuccessful in that case following a weekend of wrangling, triggering the worst of the Global Financial Crisis.

This is exactly what you guys missed out when reporting last year's incident when a priviate rural bank failed in a Chinese rural town last year.

 

[nahtanbob]

This is exactly what you guys missed out when reporting last year's incident when a priviate rural bank failed in a Chinese rural town last year.

I did not post that

 

[beijingwalker]

I did not post that

Someone did, that's why I said you guys.

 

[PakFactor]

This is an excellent opportunity for some sitting on the sidelines to dip into the market, make a quick dollar, and get out. When there is blood, it's when the lion comes out.

Though I hope for a larger correction down the road.

 

[beijingwalker]

 

[Suriya]

Many of those Indians are US citizens.