Perth tech firms address US bank collapse

A handful of Perth-based tech companies have sought to quell speculation of their exposure to prominent tech lender Silicon Valley Bank following its collapse at the weekend.

California-based startup and tech-focused lender Silicon Valley Bank was taken over by the Federal Deposit Insurance Corporation after it was unable to meet withdrawal requests in the order of $42 billion on Friday morning.

The Financial Times has reported that investors were drawn to alleged vulnerabilities in the bank’s balance sheet after it sold $20 billion worth of securities to make up for a shortfall in deposits, triggering a drop in its share price and a run on the bank.

Although the bank largely serviced US-based tech companies and startups, its collapse has forced several Australian companies to outline their links to the lender and any potential risks their exposure might carry.

Among them was ASX-listed software and high-performance computer developer DUG Technology, which took to the ASX this morning confirming it had about $3.8 million tied up in deposits and in transit with SVB, its transactional bank.

Despite its exposure, Dug assured the market that it had more than sufficient liquidity to operate as normal.

“The group has more than sufficient liquidity to operate as normal and does not anticipate the need to seek any additional financial support,” the company said.

“Further updates will be released upon any material changes to this evolving situation.”

Its remaining cash balance of approximately $4.1 million is held with the Commonwealth Bank of Australia and Standard Chartered.

Dug shares were off nearly 3.6 per cent this afternoon to trade at 81 cents on the back of the announcement.

Family Zone Cyber Safety this morning advised that its only direct dealings with the bank were a $US20,000 credit card and that it had no direct loss exposure to SVB.

“We are currently working through our suppliers to ensure no impacts to our business. At this stage we have no reason to expect any flow-on effects,” a statement from Family Zone read this morning.

“We will continue to monitor events closely. Of particular interest is the potential impact on startup tech businesses and the availability of tech industry expertise.”

Shares in Family Zone took a hit nonetheless, closing the day down 5.41 per cent to trade at 18 cents.

West Perth-based cloud and software provider Dropsuite confirmed with the market that it was not a customer of SVB and did not have any funds deposited or exposed to the bank.

Dropsuite shares were down nearly 7 per cent by market close at 20 cents apiece.

It is understood that most SVB depositors will be fully repaid after the US Federal Reserve launched a new lending facility on Sunday. 

The Federal Deposit Insurance Corporation - which had been running SVB - guarantees deposits of up to $US250,000

New York-based cryptocurrency lender Signature Bank was also shut down amid the fallout.