Canva, Xero and Freelancer are among local tech companies with millions in deposits in failed Silicon Valley Bank

- March 13, 2023 3 MIN READ
Silicon Valley Bank
Silicon Valley Bank HQ in Santa Clara, California. Photo: AdobeStock
Privately-owned design platform Canva is among multiple Australian tech companies with funds stuck in Silicon Valley Bank (SVB), which was seized by Californian regulators on Friday after customers tried and failed to withdraw an estimated US$40 billion in funds.

After an anxious weekend wondering if they’d see their money again, US officials stepped in earlier today – Sunday US time – to guarantee all funds deposited with SVB, with around 90% of customers having more than the US$250,000 (A$375,000) threshold previously guaranteed by Federal Deposit Insurance Corporation (FDIC).

While deposits are safe, the US Federal Reserve declined to bail out the bank. The FDIC is now SVB’s receiver, having stepped in and dismissed its management over the weekend. Prior to customers attempting to withdraw more than US$40 billion in the past week, Silicon Valley Bank had around US$175 billion in deposits.

The Fed said customers will be able to withdraw all of their funds on Monday, March 13, amid broader concerns that SVB, the third bank to collapse in a week, alongside crypto-focused Silvergate and Signature Bank. The central bank intervention also covers Signature deposits.

Several ASX-listed tech companies revealed today that they had millions of dollars sitting in SVB accounts, alongside several private startups and scaleups, including Canva.

While Canva did not reveal the level of its exposure, the company issues a statement saying they were disheartened by the collapse and the impact it’s having on the tech ecosystem.

“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,” the statement said.

“More broadly, we’re also very mindful that not everyone is as lucky as us and we’ll be on the lookout over the days and weeks to come to see if there are ways we can be supportive of the broader ecosystem.”

A spokesperson for leading venture capital firm Blackbird, which has backed Canva, said it had no direct exposure but has been working with affected founders over the weekend.

“SVB has been an active supporter of the Australian ecosystem for over a decade. This is a sad situation for the startup ecosystem globally,” the Blackbird spokesperson said.

“Our job is to support our founders with practical solutions. Since news of the situation broke on Friday, we have been working closely with the impacted portfolio companies to understand the extent of any exposure and to help them find solutions. We have also set up a forum for our founders to share their thinking and actions.”

VCs Square Peg and Airtree did not respond to Startup Daily’s request for comment.

Fintechs Sezzle and Xero, ecommerce marketplace Redbubble, Nitro Software and jobs marketplace Freelancer are among the ASX-listed companies now waiting to get their cash back.

US tech business Life360 (ASX: 360) has US$6.1 million sitting in an account alongside US$75.4 million in shares of money market mutual funds  invested in short-term, AAA-rated U.S. Government Treasury and Government Agency securities where SVB acted as custodian of those accounts. Life360 believes these accounts were not co-mingled with SVB’s assets.

Hotels platform SiteMinder (ASX: SDR) had around A$10 million in cash and payments sitting in SVB accounts on March 12. Nitro Software (ASX: NTO) has around US$12.2 million in cash reserves with the bank, and Xero (ASX:XRO) talling up US$5 million, saying it has not material impact on the business at less than 1% of the company’s cash and cash reserves at the end of its September 2022 quarter.

Freelance jobs marketplace Freelancer (ASX: FLN) has approximately US$2.35 million in deposits with SVB, Redbubble (ASX RBL), A$1.7 million. BNPL Sezzle (ASX: SZL) has US$1.2m there, while Dubber estimated its exposure at A$1.3m.