Tech execs’ relief at US bank guarantee
AUSTRALIAN technology executives have welcomed a move by US government officials to guarantee depositors of the collapsed Silicon Valley Bank, allaying fears of widespread lay-offs and start-up closures.
A growing number of Australian technology companies and investors have revealed their exposure to SVB, which collapsed at the weekend in the second-biggest bank failure in US history, stoking fears that start-ups with money tied up in the bank would not be able to meet payroll or rent obligations.
However, US banking regulators stepped in on Monday, devising a plan to backstop depositors and give them full access to their money. “Today we are taking decisive actions to protect the US economy by strengthening public confidence in our banking system,” the federal regulators said in a statement on Monday.
“This step will ensure that the US banking system continues to perform its vital roles of protecting deposits and providing access to credit to households and businesses in a manner that promotes strong and sustainable economic growth.”
The Tech Council of Australia, the peak body representing some of the nation’s largest technology companies, welcomed the US Treasury and Federal Reserve’s emergency support, which has promised to return in full all money depositors had with SVB. “This will relieve financial pressure on affected companies,” a Tech Council spokeswoman said.
Meanwhile, SVB’s executive in charge of Australia and New Zealand, Sara Rona, opened up in a LinkedIn post about the bank’s collapse.
“A heartbreaking day. Thank you to everyone who has called, messaged, texted, etc. It means the world to have such a global community around me,” Ms Rona said. “I’m incredibly aware of how this has impacted SVB’s clients – my clients, and I don’t take that lightly.
“While I’m unsure what the future holds – like all my colleagues and the start-up ecosystem alike, hoping for a positive outcome.”
A number of ASX-listed tech firms and private startups have revealed they had some exposure to the bank. Australian unicorn graphic design software maker Canva said it had a “very small portion” of its overall capital in an account with SVB.
“We’re in the fortunate position of having the majority of our cash outside of their banking system and have safety nets in place to ensure our operations aren’t compromised,” a spokesman said.
ASX-listed software firm Life360 said on Monday it had exposure of up to $5.6m with the bank, while SiteMinder had cash holdings of up to $10m, plus an undrawn $20m revolving credit line tied to SVB.
Other companies with exposure to the bank included software outfit Xero, which had a total exposure of $5m. ASX-listed software firms Redbubble, Sezzle and Dubber also had exposure, which each described as immaterial.
ASX-listed collaboration software maker Nitro had $12.2m in cash reserves at SVB, while Tissue Repair, Pengana, Laybuy, Freelancer and Whispir also had reserves with the bank.
As financial turmoil swirls in the US, regulators have also closed down the cryptofocused New York-based Signature Bank, citing systemic risk.