Nitish Mittersain, Nazara Technologies CEO, said Rs 64 crore of its two subsidiaries is stuck in SVB
New Delhi:
Two things worrying Indian startups the most after a key lender in the US collapsed on Friday are whether their money is safe and if it can be moved out of the dead bank fast, according to the owner of an Indian firm whose two arms have Rs 64 crore stuck in Silicon Valley Bank, or SVB. The situation could turn dire for startups that depend on the money stuck in SVB for their next salary; they may have to look for new loans to meet everyday expenses, or working capital needs, for some time.
Nitish Mittersain, the chief executive of Nazara Technologies Ltd, a listed company, is “watching and waiting” for what happens next when SVB allows customers to access their deposits tonight. US authorities have said SVB will re-open no later than Monday morning New York Time, which could be any time between 9 pm and 10 pm in India.
Mr Mittersain said the bank’s website was slow to respond around the time it was supposed to allow customers to access their deposits, maybe due to high traffic as startups across the globe rush in to withdraw their money.
“We had initiated transfers prior to the closure of the bank that were not processed. We are waiting and watching whether these transfers get automatically processed or we need to make new transfers. Our team will be very active tonight to see how we can recover these funds or to what extent we can recover them,” Mr Mittersain told NDTV today.
He said while Nazara Technologies itself is safe with a cushion of over Rs 600 crore, its two subsidiaries have Rs 64 crore stuck in SVB, which is no small amount for early-stage startups.
Every startup whose money is stuck in the US bank is likely to withdraw all their money tonight if they can. Mr Mittersain said his team, too, will try to move out all their money if possible.
SVB had been a key lender to US startups since the 1980s. US authorities swooped in and seized the bank’s assets on Friday after a run on deposits made it no longer tenable for the medium-sized bank to stay afloat on its own. Little known to the general public, SVB specialised in financing startups and had become the 16th largest US bank by assets.
SVB crisis: US President Joe Biden in a televised address from the White House today said depositors will get all their money back
One of the reasons why many startups around the world, including in India, found themselves off-guard when SVB collapsed was because the bank had a solid reputation as a dependable partner for young companies for decades, Mr Mittersain said. But a few may have seen it coming, he added.
“We have been banking with SVB for a couple of years, not for a very long time. Our understanding of SVB was it was always in the top 20 US banks, very reliable, as it had been in the business for 40 years. So I would say we were caught by surprise by the very rapid development, which is why we could not get the funds out of time. I think some VCs (venture capitalists) sitting in the US probably picked up the signal a little earlier. And in this kind of situation, even a few hours can make a world of difference, which is what has happened,” Mr Mittersain told NDTV.
US President Joe Biden in a televised address from the White House today said depositors will get all their money back, a message that has injected some optimism among those whose money is stuck in SVB. Startups, however, are waiting how fast the US government’s assurances convert into action.
“Implementation is very important. For startups which are dependent completely on money in the bank, it is important how fast they are able to access it. For young startups depending on their next salary, if they don’t get funds in a week or two, it can really stress them out. One is about money being protected, and the other is about timing, how fast the money can be taken out – these are crucial factors. Otherwise, in the meantime startups will have to find alternative ways of financing and loans to bridge working capital needs for at least a month,” Mr Mittersain said.
The surprisingly rapid implosion of SVB has markets jittery over a potential sign of widespread turmoil, but analysts see only a limited risk of financial contagion.
