Indian startups transfer up to $300 million from collapsed SVB

After U.S regulators permitted depositors
to withdraw their funds from the Silicon Valley Bank, Indian startups have transferred $250–300 million over the past 24 hours, as per Financial Express report. Early-stage startups typically had cash balances of up to $2 million to $3 million in U.S bank accounts, while bigger startups typically had cash balances of $20 million to $25 million in SVB accounts.

Further, SVB has still not resumed direct international transfers, businesses must first establish new business bank accounts in the U.S in order to transfer funds.

SVB announced on March 13 that all deposits had been transferred to Deposit Insurance National Bank of Santa Clara, which is presently being taken over by the US Federal Deposit Insurance Corporation (FDIC) (DINB). The FDIC established the new bridge bank DINB with the primary goal of enabling SVB customers to quickly access their money.

The majority of Indian startups impacted by the SVB collapse are those supported by US-based accelerators like Y Combinator, where companies choose a "flip structure" with a parent company registered in the US, especially in Delaware. In order for early-stage startups to obtain money from foreign investors, the "flip company" structure has already become more and more important.

According to PTI Nazara Technologies reported that out of Rs 64 crore held by its two step down subsidiaries in Silicon Valley Bank, Rs 60 crore has been successfully transferred to bank accounts outside of SVB.

The balance Rs 4 crore remains in SVB accounts for unrestricted operational use, the company said in a regulatory filing.