March 28, 2023
Australian and New Zealand software companies and fintechs have listed exposures to the sudden collapse of Silicon Valley Bank, ranging from a couple of hundred thousand dollars to over $10m. Silicon Valley Bank went into receivership after clients withdrew deposits “to meet their liquidity needs” in a difficult economic climate, and the bank could not…

Australian and New Zealand software companies and fintechs have listed exposures to the sudden collapse of Silicon Valley Bank, ranging from a couple of hundred thousand dollars to over $10m.

Silicon Valley Bank went into receivership after clients withdrew deposits “to meet their liquidity needs” in a difficult economic climate, and the bank could not raise funds to stay afloat.

The ASX on Monday morning was heavy with announcements from software makers, fintechs and other technology companies on both sides of the Tasman with potential exposure to the collapse.

US regulators have since said that all depositors with Silicon Valley Bank would be protected.

“Depositors will have access to all of their money starting Monday, March 13 [US time],” they said.

Of the local companies that had declared potential exposure:

Nitro Software said [pdf] “approximately US$12.18 million” (A$18.36 million) of its global cash reserves are held on deposit at SVB.

SiteMinder, which makes hotel booking and management software, said it has “cash holdings of up to A$10 million” potentially impacted. “This consists of account cash holdings and anticipated payments from customers and partners which we may not be able to redirect in time,” it said. [pdf]

Life360, maker of a family social networking app, said [pdf] its exposure is up to $5.6 million.

Xero, which makes hosted financial software, said [pdf] its exposure is “approximately $5 million USD” but said it is not a material amount, and less than one percent of its total cash.

Sezzle, a buy now pay later operator, said [pdf] it had US$1.2 million on deposit, less than two percent of its cash and cash equivalent holdings.

Damstra, a maker of workforce management software-as-a-service, disclosed [pdf] a “minor relationship” with $175,000 deposited. The currency is not identified.

Australian unicorn Canva is also reported to have been exposed.

The Australian Banking Association (ABA) said the SVB collapse “has been brought about by a particular set of factors, including a high exposure to the tech industry.”

“Australia’s banks in contrast are strong and subject to a different set of regulatory frameworks,” it said, adding that ABA members “are well diversified and therefore well positioned in the event that one sector experiences challenging financial circumstances.”

Tech Council of Australia CEO Kate Pounder wrote on LinkedIn that her organisation “has been working constructively with the Australian government, industry leaders, and the Australian Investment Council over the weekend on the evolving situation in the US.”

“Our preliminary sense is that the majority of local Australian firms are not directly impacted, although we are aware of some who have been, and we want to work with them to support them,” she wrote.

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