SVB Impact: Investors, Indian VCs offer emergency credit lines for startups

In order to provide startups with immediate cash, particularly for the working capital requirements in the wake of the collapse of Silicon Valley Bank (SVB), Indian venture capital firms and venture debt firms are setting up an emergency line of credit and debt options.

The parent company of Silicon Valley Bank, SVB Financial Group, announced to the market late on March 8 that it had sold roughly $21 billion worth of securities from its holdings, resulting in an after-tax loss of $1.8 billion for the first quarter. This caused a huge sell-off of its stock on Wall Street, which in turn caused a flurry of withdrawal with regulators declaring the bank insolvent.

Although some Indian startups claimed that only a small part of their money was in the process of being withdrawn and that it would take some time, the Biden administration declared on March 13 that SVB depositors will have complete access to their money.

According to Chachra of 8vdx, startups must receive their money back as soon as possible in order to run payroll by the end of the month and meet other urgent obligations, which will be a major issue, as told to Moneycontrol.

The startups won't be able to make many short-term and immediate payments, which may regrettably even spell the end for many small startups, according to Chachra.

The revenue-based financing platform Klub, which is supported by Sequoia Capital, provides specialised credit lines, term loans, EMIs, and revenue-based financing model fusion.

"We do not have a capital reserve, but we can provide funding ranging from $6K to $400K within 48 hours. Anurakt Jain, cofounder and CEO of Klub, in coversation with Moneycontrol added that we have a number of supply-side partners who are eager to provide money to startups during this time of crisis.