Chennai: Though the start-up ecosystem has not yet started seeing any major funding impact of the Silicon Valley Bank collapse, more than a dozen Indian SaaS unicorns and many more “soonicorns” are likely to be impacted in the future for their funding requirements.
“Most Indian SaaS start-ups that have a large presence in the US are banked with Silicon Valley Bank. It is almost a playbook practice for most tech and SaaS start-ups to set up a presence in the US for access to customers, talent, and investors. More than a dozen Indian SaaS unicorns and many more “soonicorns” are likely to be impacted,” said Ankit Kedia, Founder and Lead Investor, Capital A.
SaaS companies account for a fairly large chunk of funding deals, As per the data of Entrackr, SaaS companies accounted for 150 deals in 2022 and stood third in terms of deal volumes. Even in January, they were in the third slot in terms of number of deals. However, as the pro-cess of the current deals that are getting announ-ced would have been initiated much earlier, the impact of the SVB episode on the funding ecosystem cannot be ascertained properly at this time.
“Some investors are taking a cautious approach towards investing in Indian startups in the wake of the SVB episode, but it is difficult to determine the extent to which this has impacted the overall investment activity. Of course, the startups which are already banking with SVB and are in process of raising a new round will see a delay till there is clarity on the return of their deposits. This may also impact the round structure, dilution, and a few other terms to protect VCs from the inherent risk of concentrated banking relationships,” said Kedia.
Startups that already had an account with SVB have to bear the brunt of the uncertainty of their deposits. Going by the assurance of both FDIC as well as the proactive intervention of Indian government bodies, the damages are likely to be more or less salvaged.
