Banking crisis: It's time for a relook at funding ecosystem for start-ups

The crisis in global banking has unsettled the Indian start-up ecosystem and raised afresh the old question of overdependence on offshore investors

The mess on account of the failures of the Silicon Valley Bank (SVB), Signature Bank and the epitaph of Credit Suisse — now acquired by UBS — has unsettled India’s start-up ecosystem that is already struggling against the “funding winter”.

Let’s look at the numbers for calendar 2022.

According to EY (“India Trend Book 2023”), the total private equity (PE) and venture capital (VC) investment activity stood at $56.5 billion, a year-on-year (YoY) fall of 26 per cent; start-up deal-making at $18.6 billion was lower YoY by 35 per cent. This slowdown has affected the fund-raising plans of many entities.