A BANK RUN AND 100 HOURS OF CHAOS

How did an Indian startup deal with the closure of Silicon Valley Bank, the confusion and anxiety? Here’s the story

- Ranjani Raghavan

Around 8.30pm on 9 March, Sujit Karpe was finally done with a long work day. Back home in Pune's Swargate neighbourhood, he was about to bite into a piece of chicken, his dinner for the night. That's when his chartered accountant called.

“You have a lot of money in Silicon Valley Bank (SVB), right? You need to withdraw that," Lalit Valecha, the chartered accountant, told him. “It is going into a crisis."

Karpe is the co-founder and chief technology officer of iMocha, a software company operated by Mocha Technologies. The eight-year-old company offers skills assessment services to enterprises, in India, the US and other parts of the world.

Karpe comes across as a reasonably calm man. But that night, he did get a tad jittery.

iMocha had raised $14 million in January 2022, in a funding round led by venture capital (VC) firm Eight Roads Ventures. Around $4 million of that capital was parked in SVB.

He immediately rang up a friend who once owned a bank in the US. Did he need to pull out the money? The friend had an assuring tone. “SVB is a stable bank; nothing will happen," Karpe was told.

But then, WhatsApp groups started buzzing with other entrepreneurs voicing concern.

Sure, SVB was a big bank, with over $200 billion in assets. Most startups who do business in the US typically opened their first bank account with SVB. How did the bank become such a darling? The answer is simple. SVB was the most startup friendly bank. It went out of its way to court international and local startups as well as the tech community. For instance, it was the earliest bank to not require a US social security number for a bank account.

As startups grow bigger, they tend to diversify their banking partners. But smaller companies and early-stage startups mostly rely on one bank. iMocha, which closed 2022 with revenues of $5.4 million, is a case in point. It relied exclusively on SVB in the US.