SVB crisis: Vijay Shekhar Sharma says Silicon Valley Bank not a stakeholder in Paytm

Paytm founder and CEO Vijay Shekhar Sharma on Saturday said that the Silicon Valley Bank, which was one of its first investors, fully exited with handsome returns on their total investment of only $1.7 million. He clarified that the bank is not a shareholder anymore. SVB has been shut down by US regulators, and its assets have been seized, the Federal Deposit Insurance Corporation (FDIC) said on March 10.

The closure has shocked the tech industry worldwide, as tech unicorns and SaaS were the biggest customers for SVB. The bank in all had $209 billion in total assets and about $175.4 billion in total deposits, as of December 2022.

On Friday, the FDIC said that SVB was closed to protect insured depositors. “The FDIC created the Deposit Insurance National Bank of Santa Clara (DINB) for the depositors and will maintain its normal business activities. At the time of closing, the FDIC as receiver immediately transferred to the DINB all insured deposits of Silicon Valley Bank,” it said.

The FDIC will sell the assets of SVB, while the DINB will maintain its normal business activities. While the insured depositors of SVB will receive their insured deposits, the uninsured depositors in the bank will be paid dividends from the asset sale.

SVB is deeply rooted in the US start-up scene and is the only publicly traded bank focused on Silicon Valley and tech start-ups. As per Fortune.com, the bank has been lending to 50 per cent of all venture-backed companies in the US. Venture or private equity funds make up approximately 56 per cent of the bank's global banking portfolio in 2022.

According to the latest Tracxn data, SVB had exposure in 21 start-ups in India, though the amount of investment is not clearly mentioned. Start-ups that had raised funding from SVB include Paytm, Icertis, Bluestone, Carewale, InMobi, and Loyalty Rewardz, according to a report in Business Standard.

Among VC players, Accel Partners has a tie-up with SVB. The SVB page stated that the Accel India founders choose SVB to accelerate growth.

Investments done by SVB in Indian companies

Company	Funding ($ million)
BlueStone	111
Paytm	4,637
One97 Communications	2,787
InMorbi	265
Paytm Mall	808
Naaptol	133
Bharat Financial Inclusion	144

Source: Tracxn

Clarifying its stand on the investment done by SVB in Paytm, Sharma said Silicon Valley Bank was one of my first investor when @AshLilani supported us in first around of investments at One97. But he said that SVB exited fully with handsome returns on their total investment of only $1.7 million. He added that at present they don't hold any stakes in Paytm.

SVB had 17 branches in California and Massachusetts. Treasury Secretary Janet Yellen told lawmakers on Capitol Hill Friday the department was aware of recent developments and was monitoring the situation, calling it "a matter of concern" when banks experience losses, according to CNBC.

SVB Financial Group told its employees in a memo, earlier on Friday, that they should work from home until further notice.

Paytm's current stakeholders

Paytm is currently backed by Japan’s SoftBank Group Corp. and China’s Ant Group Co. Japan's SoftBank and China's Alibaba Group are said to be in talks to offload their stake in the digital payments platform through a secondary stock deal, according to a report.

In February, Alibaba completely offloaded its stake in the fintech giant. The Chinese e-commerce company had a 6.26 per cent stake in Paytm, which it sold in two tranches in January and February.

In the December quarter, Paytm recorded a consolidated net loss of Rs 392 crore. The company had posted a net loss of Rs 778.4 crore in the same period a year ago.

Revenue from operations jumped about 42 per cent to Rs 2,062.2 crore during the quarter, from Rs 1,456.1 crore in the year-ago period.

Sharma earlier said the company during the reported quarter has achieved its target for operational profit, excluding ESOP cost.

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