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After Silicon Valley Bank failure, fears over this major global bank's collapse
He continues, although depositors have started getting money back but the bigger problem is that lending to start ups would get severely restricted and either they will have to downsize or they will have to shut down.
Ritu Mathran, chief financial officer and co-Founder of InCruiter, a firm associated with recruitment services, shares the same apprehensions, “Silicon Valley Bank's potential impact on the fall in demand for IT services could result in IT companies pulling back their recruitment efforts. This could significantly affect fresher recruiting as employers may prioritize keeping existing employees over hiring new talent.”
Experts advise workers to highlight their skills in order to avoid being laid off as a result of the Silicon Valley Bank crisis.
Why was Silicon Valley Bank a darling to startups?
The bulk of SVB's investors are start ups. Another important reason in the bank's demise is a lack of diversity among customers. SVB reportedly had exposure to at least 21 startups in India, though how much money was invested in them is unknown. (ALSO READ: Silicon Valley Bank collapse: New CEO urges top venture capital clients to move deposits back)
The SVB financing model also catered to tech start-ups that were unable to collect funds due to a funding winter, could be to blame.
"SVB was a leader in venture debt and was financing loss making start ups as well," says Ramit.
However, Biden government is supporting Silicon Valley Bank depositors, raising hopes that the money will be recovered. Vijay Yalamanchili, chief executive a human resource solution firm Keka, says, "There might be minor inconveniences in the immediate future in terms of giving pay checks soon. However, there won’t be an overall big impact on businesses, due to which, the IT firms’ recruitment drives I believe are not going to suffer.”
