The spillover of the Silicon Valley Bank (SVB) collapse into India’s startup ecosystem is becoming more evident, with several early and mid-stage ventures that were banking with the California-based lender finding themselves in a cash crunch for daily expenses such as payroll transactions.

These particularly include startups backed by the famed Silicon Valley accelerator Y Combinator (YC). At least 40 YC-backed Indian startups have $250,000 to $1 million in deposits with SVB, while more than 20 of them have deposits of more than $1 million, according to people in the know.

While Indian origin software startups were among the first to be identified as affected by the SVB meltdown, new age Indian ventures with YC backing are also now worried. They have to set up a company in the US to raise funds from the Silicon Valley-based accelerator and YC startups have been working closely with SVB for their banking needs and raising funds.

Underscoring the importance of the SVB meltdown, YC president Garry Tan said in a series of tweets that the collapse of SVB was an “extinction level event” for startups given that impediments in making payrolls could lead to “mass furlough”.

Tan said in a post on Twitter that “30% of YC companies exposed through SVB can’t make payroll in the next 30 days”. “I recommend that you reach out to your local congressman to get this on their radar TODAY. Now,” he wrote.

While larger YC-backed companies in India such as Razorpay, Meesho and Zepto have no exposure to SVB, early-stage and mid-stage startups are seeing the impact of the bank’s collapse. Some of the larger YC companies from India moved funds over the past two weeks sensing a potential disruption, said people aware of the matter.

“For large firms, we always have three or four banking partners. So it is easier to move funds within the US as well. Smaller startups don’t have this support and they are more impacted,” said one of the YC-backed entrepreneurs, who did not wish to be identified.

Also read: Top VCs in a huddle to discuss Silicon Valley Bank collapse, vow to be ‘supportive’

YC, which is known to back global companies such as payments firm Stripe and hospitality startup Airbnb, has more than 200 active investments in India. Over the past 18-24 months, it has seen a higher number of Indian startups joining batches. Startups such as Groww, Khatabook, OkCredit, Cashfree Payments and FamPay are among the other bets of YC in India. Last year, more than 50 Indian startups were part of the two cohorts of YC.

A query emailed to Y Combinator did not elicit a response till Saturday press time.

Another founder of a YC-backed fintech startup, which serves non-resident Indians in the US, said while immediate payroll would be managed, problems would arise if funds are stuck after that. “The next steps for us – wait for the US Fed to act till Monday; fill out nominations to get in line to get dividends when SVB assets are distributed; figure out a short term liquidity plan (next two months). Since transfers were blocked/paused yesterday, most of us didn’t get a chance to transfer,” the founder said on condition of anonymity.

Shantanu Gangal, founder of AI-based SaaS startup Prodigal, which is also backed by YC, said multiple companies backed by the accelerator were facing “short-term stress” on making payroll and managing working capital requirements.

Also read: ETtech Explainer: how rising US interest rates caused a pincer movement on Silicon Valley Bank

Late Friday, the US Federal Deposit Insurance Corporation (FDIC) said that SVB was closed by the California Department of Financial Protection and Innovation. The FDIC will sell the assets of SVB, and the Deposit Insurance National Bank of Santa Clara will maintain its normal business activities. While the insured depositors of SVB will receive their insured deposits up to $250,000, the uninsured depositors in the bank will be paid dividends following the sale of the 40-year old bank’s assets.

Following SVB’s announcement on Thursday that it was conducting a share sale after witnessing a faster-than-expected decline in deposits – which happened as a result of rising interest rates and falling startup funding – several large investors, including YC, wrote to their portfolio companies asking them to withdraw their deposits from SVB.

Also read: US government shuts Silicon Valley Bank; Indian SaaS firms mull options to transfer deposits

Rahul Mathur, founder of YC-funded small and medium enterprises insurance startup Verak, said even though the company’s liability was limited to $188,000, its liquidity was getting impacted. “Fortunately, for us the total liability is limited to $188,000, which is under the $250,000 FDIC insured limit (but, this doesn’t mean we are 100% safe – it does impact our liquidity – without risking the business since we have more than $300,000 in our Indian operating subsidiaries),” he said.

Another Bengaluru-based founder of an early-stage business-to-business startup backed by YC said the company pulled its deposits out from SVB on Thursday. “We also had a bank account with Brex. On Thursday, we pulled out some money to Brex and some to India. We just retained $5,000 in SVB bank which is not a problem because $250,000 is already FDIC insured. There is definitely a panic. Everyone is tense and stressed right now. Some people fortunately took out the money, whereas some people tried in the morning and it did not pass,” said the founder, who did not wish to be identified.