SETBACK FOR START-UPS

SVB COLLAPSE

- M.G. Arun

The collapse of the California-based Silicon Valley Bank (SVB) on March 10 came as a shock to the financial world. SVB was not just the 16th largest bank in the US, its fall also resuscitated the spectre of the 2008 Lehman Brothers collapse triggered by the sub-prime crisis. It had led to a financial meltdown in the US and across most parts of the world, but the SVB crisis is believed to be lesser in intensity than the ‘Lehman moment’. SVB also became the second biggest bank failure since the collapse of the Washington Mutual in 2008. Its closure will have an immediate impact on several start-ups in the US as well as those in India with subsidiaries in that country and accounts with SVB. It may also add up to funding troubles for Indian start-ups in the future, squeezed as they already are by a post-pandemic funds crunch, given the more intense scrutiny they will now face.