Founder and Chief Executive Officer of Paytm Vijay Shekhar Sharma on Saturday said that collapsed Silicon Valley Bank (SVB) is not a shareholder of Paytm as of now. Reacting to the news regarding the effect of SVB's collapse on Indian start-ups, Sharma said that SVB was one of Paytm’s first investors but they existed the firm “long back”
Vijay Shekhar Sharma Tweeted, “Silicon Valley Bank was one of my first investor when @AshLilani supported us in first around of investments at One97. Thanks to him, we grew from a telco VAS company to what we are today.”
“Long back, by selling to other private investors, SVB exited fully with handsome returns on their total investment of only $1.7Mn. They neither are a current shareholder nor invested the amount given here," said the Paytm CEO
Sharma's tweet comes after SVB collapsed on Friday. Silicon Valley Bank (SVB) was regarded as a major US lender for venture capital-backed companies, specifically for tech start-ups. The closing of SVB is seen as the largest bank failure since Washington Mutual during the height of the 2008 financial crisis.
With $210 billion in assets, Silicon Valley Bank ranks as the 16th largest bank in the US, according to the AP report. It said that the bank worked as a financial lender for venture capital-backed businesses, which have been severely impacted over the past 18 months as a result of the Federal Reserve raising interest rates and decreasing investor demand for risky digital assets. The Federal Deposit Insurance Corporation (FDIC), which typically protects deposits up to $2,50,000, said it had taken charge of the roughly $175 billion in deposits held at the bank.
Other India Start-up founders have also reacted to the news. Snapdeal's Kunal Bahl said SVB lent them money in 2012 when the business was grappling with a cash crunch.
Bahl tweeted, “In 2012, in the midst of pivoting our business model from online coupons to e-commerce, we found ourselves in a cash crunch as investors weren't convinced we could pull it off.”
CEO of Mumbai-based Verak Insurance Rahul Mathur said his company was among those affected. He tweed, “> 60% of YC backed co's have > $250K in SVB bank accounts (source: YC WhatsApp group). FDIC insurance limit is $250K - some startups could be at risk of losing big money:”
“There are some YC companies operating in India (maybe ~10%) with more than $1M in SVB accounts. Common sense: YC's new "basic" deal is for $500K - and you'd raise at least $1M more from other investors. Fortunately, for us - the total liability is limited to $188K,” Mathur added.