Aussie tech firms say they are insulated from Silicon Valley Bank fall out

The collapse of SVB has sent shockwaves around the world, and these have been felt in some unexpected quarters. SVB was, of course, primarily connected with US startups, but also has some dealings with other markets. As a nation with more tech startups per capita than any other, it would seem to be almost impossible that Australia could walk away from the debacle untarnished. But the Australian Treasurer, Jim Chalmers, claims that this is one challenge through which Australian businesses have managed to do just that. 

Mr Chalmers acknowledged that some individual businesses might be affected, but insisted that none would suffer significant consequences. He remarked that Australia’s institutions are solid and its banking sector well-capitalised. 

Nitro deal will be unaffected 

One of the biggest questions was what impact if any the SVB collapse would have on the Nitro Software takeover saga. Negotiations for the Melbourne-based tech firm have been going back and forth since last year, and at the beginning of February, Nitro shareholders voted against a AU$527 million offer from KKR-backed Alludo.  Six weeks on, they are being encouraged to accept an AU$532 million offer from Private Equity firm Potentia Capital. Potentia already has a 19.3 percent holding in Nitro. 

The negotiations have been protracted and have attracted plenty of media coverage over the past few months. News that more than $12 million of Nitro’s cash reserves were held on deposit at SVB raised concerns that the deal might collapse. However, both parties have been quick to pour oil on troubled water and confirm that the deal is still on the table and will not be stalled by the latest events.

Online casinos proceeding as usual

Australia is synonymous with gambling – the nation’s people wager more on casino gaming than any other country, so naturally, there is plenty of concern over whether the top Australian online casinos would be affected. Again, the news for Australian gambling enthusiasts is mostly positive.

Casino sites in Australia are actually based in other jurisdictions due to Australia’s unusual online gambling regulations. Information to hand does not indicate that any of these had uninsured deposits held at SVB, so gamblers should be able to continue spinning the reels and dealing out the cards as usual.

The SVB incident does, however, serve as a reminder to always check who is holding your money when you play online casino. Always check where the casino is licensed and if the information is missing or ambiguous, strongly consider switching to a new platform.

Australian regulator remains on high alert

The SVB collapse was the worst incident of its kind to hit the US since Black Friday in 2008. Yet two days later, New York state regulators further suspended Signature Bank. To date, there is still only rumor as to exactly why it was closed – ostensibly it looked a great deal more secure than SVB, so there is still a sense of nervous anticipation hanging over the finance industry, and not just in the USA.

The Australian banking regulator has already said it had intensified the supervision of the local banking industry and was seeking more information from banks on any potential impact. We can expect that level of high alert to continue until such time as either the crisis abates and banks are once again operating at full capacity or the true root cause of these incidents is identified and providers can get back to their normal service levels. 

For Australia’s small business community, all this is just another ripple on the pond. The tech sector has shown no indication of slowing down, and the Australian market, especially in and around Melbourne, has never looked in better health. So long as the Australian Treasury continues to rule with an iron fist, Australia will continue to be the southern hemisphere’s little piece of startup heaven.  

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