SVB Collapse: Wire Transfer Freeze, Startups Cannot Withdraw Money

After the Hindenburg report, the collapse of Silicon Valley Bank (SVB) has been in the headlines. According to the reports, startups from all over the world have been attempting to withdraw their money from the bank, but their wire transfers have been frozen. One of the reasons behind it is the funding boom that industries across the globe have been witnessing. As a result, it may have an impact on entrepreneurs and startups as well.

It is customary for Indian businesses to incorporate in the United States in order to obtain finance from global VC firms, and the funds raised are frequently placed in SVB. This is increasingly common among SaaS companies, whose consumers are mostly from the North American market. SaaS companies sell software as a subscription online, and India has been particularly strong in the area due to the little investment required in the client market.

The SVB accounts typically hold the money raised by these early stage firms. Its consumer revenue is primarily placed in Indian accounts to fund operations and salaries in India. Yet, the larger and older SaaS companies have diversified their assets, banking with a number of large banks. 

Even as the US regulator shut down SVB on Friday night, many companies with deposits in the bank were keeping a close eye on developments. The funds in the Indian bank accounts are barely sufficient for 2-3 months of payroll and operations. Many people are hoping for a settlement by then.