USISPF chief Mukesh Aghi said that the Silicon Valley Bank has been the go-to bank for the US and foreign tech startups and members of the venture capital industry for years and its abrupt halt has left several of its customers worldwide in a crisis.
Washington: Welcoming the measures taken to fully preserve the insured and uninsured deposits at the now collapsed Silicon Valley Bank, the US India Strategic and Partnership Forum (USISPF) has said a swift resolution is vital for the United States to maintain its leadership in the global startup and innovation ecosystem.
USISPF chief Mukesh Aghi on Sunday observed that the Silicon Valley Bank (SVB) has been the go-to bank for the US and foreign tech startups and members of the venture capital industry for years and its abrupt halt has left several of its customers worldwide in a crisis.
He said the most immediate task was to prevent the contagion beyond the current limited case and maintain the US leadership in the global startup ecosystem by ensuring a swift and orderly resolution of the matter.
“The authorities have done so, realising that failure to protect the value of deposits would cripple many of these startup firms, resulting in the loss of hundreds of thousands of jobs and impacting millions of lives globally. Furthermore, the startup ecosystem in the United States is tightly integrated with the ecosystem globally,” Aghi said in a statement.
“The financial crippling of many startups would reverberate around the world, especially in innovative countries like Ireland, Israel and India. The important measures were to preclude the loss of credibility and trust in Silicon Valley, which if lost, might never be restored and would further erode the United States’ position as the global startup leader,” he said.
California-based Silicon Valley Bank, the 16th largest bank in the United States, was closed on Friday by the California Department of Financial Protection and Innovation which later appointed the Federal Deposit Insurance Corporation (FDIC) as its receiver.
One of the United States’ most significant and successful exports has been the idea of the American Dream, a dream many founders and co-founders of startups have emulated, Aghi said, noting that the USISPF research shows that more than 70 per cent of startups have immigrant co-founders, and as of 2022, over 50 CEOs of public companies are of Indian origin.
“In the tech space, both the United States and India have seen tremendous collaboration and convergence. The synergy is best epitomised by India’s tech talent and the United States’ robust tech sector,” he said.
The technology industry for decades has provided the US with a global competitive edge, and Silicon Valley continues to epitomise that hub for innovation. During his 2015 visit to the Valley, Prime Minister Narendra Modi had said, “California is one of the last places in the world to see the sunset, but it is here that new ideas see the first light of day.” The startup innovation economy houses millions of jobs, liquidity, and dreams, all of which stand at significant risk if liquidity goes awry, he said. USISPF’s immediate focus is to help ensure the safety of deposits of startups and venture capitalists (VCs) to be assured of security in a timely and efficient manner, Aghi noted.
“The dislocation of funds from SVB is not just a financial crisis, but can snowball into a tech crisis. As such, we thank the Federal Reserve, the FDIC, and the US Treasury Department for acting swiftly and for reassurance to startups during this crisis. In the future, I urge the White House and Treasury Department, working in partnership with the Congress, to strengthen the regional banking system,” Aghi said.
“The US startup ecosystem has a tremendous impact worldwide, so immediate action was needed and thus taken to protect it during this critical time,” the USISPF president added.