Reserve Bank of India (RBI) has informed a parliamentary panel that the collapse of Silicon Valley Bank (SVB) may further reduce the availability of global funds for Indian startups at a time when the startup ecosystem is already struggling due to the funding winter. However, the impact of the bank’s collapse on the Indian startup ecosystem seems to be limited. The RBI also mentioned that owing to rate hikes and tight liquidity conditions globally, the venture capital industry has been revaluating investments. In India, fundraising activity has already declined 35% from $37.20 billion in 2021 to $24.70 billion in 2022. SVB’s collapse might contribute to this trend, and availability of global funds to Indian startups may take a pause in the short run.
The members and officials agreed on the need for specialized financial services for Indian startups, and many of India’s financial institutions are setting up specialized branches and products for startups. According to Inc42, Indian startups have laid off over 23,000 employees since 2022, and funding raised by Indian startups plunged 75% to $3 billion in Q1 2023 from $12 billion in Q1 As per the same report, the members and officials agreed on the need for specialized financial services for Indian startups. Many of India’s financial institutions are reportedly setting up specialized branches and products for startups, recognizing the importance of the startup ecosystem in India and the need to support its growth.