What are the implications of the start-up-friendly bank collapse on aspiring bankers in Australia?
The start-up-friendly bank and its ripple effect
SVB was known for its unique and specialised services, with a focus on venture capital and technology banking. The bank catered to the needs of startups and entrepreneurs, providing financing, strategic advice, and connections to investors and industry partners.
Early in the morning, March 10th 2023, words began spreading that SVB's shares had fallen more than 60 per cent when the bank said it planned to sell shares to raise capital after taking a $US1.8 billion ($2.7 billion) charge from the sale of some assets.
After a short haul of frantic depositors withdrawing their uninsured deposits in large quantities, the bank halted its operations. Only after a few days after the SVB collapse, the Switzerland-based multi-billion investment bank UBS struck a deal to buy its smaller rival Credit Suisse for about $US3.3 billion ($4.9 billion) in a share deal that includes extensive guarantees and liquidity provision.
The collapse of SVB may have a ripple effect on other financial institutions, particularly those that had close ties with SVB or relied on their services. This could lead to a tightening of the job market and a reduction in job opportunities for students looking to break into the finance industry. In addition, it could also result in a shift in the types of skills and experience that employers are looking for in job candidates, with a greater emphasis on risk management and compliance.
The global eco-system of SVB
SVB serves as a banking service provider for around 50% of all venture-capital-funded startups in the US, and a significant number of these startups invest in Australian-based startups, resulting in an interconnected web of business. As a result of this close-knit ecosystem, Australian entrepreneurs who secure funding and connections in Silicon Valley can experience rapid growth and attain billionaire status, while the collapse of SVB can instantly erase their fortunes. This realisation struck Lawren Humphrey - Mintable’s CEO during the intense and hectic hours following the news of the bank's collapse.
Mintable is a platform that focuses on community-based learning and growth for aspiring managers. Their aim is to motivate individuals to realise their maximum potential.
With 80% of its funds coming from SVB and 20% from CommBank Australia, “Obviously, losing that money [in SVB] would be quite distressing," Humphrey says.
And many start-ups - tens to hundreds of SVB-funded start-ups have reported experiencing the same thing. While this has essentially impacted graduates and aspiring CEOs in their journey to developing their own start-ups, it has also had great impacts on the market.
This is not to mention the collapse of Credit Suisse. The collapse could lead to a decrease in available job opportunities, particularly within the investment banking and wealth management sectors. Additionally, the reputation of the financial industry as a whole could be negatively impacted, leading to decreased interest and confidence among students considering a career in finance.
The collapse of Credit Suisse could lead to increased regulatory scrutiny and changes to industry practices, which could have further implications for finance students seeking to enter the industry. Ultimately, the full impact of the collapse of Credit Suisse on finance students is uncertain and will likely depend on a variety of factors, including the extent of the fallout from the collapse and the overall state of the finance industry at the time of graduation
Opportunities
Despite these challenges, there are still opportunities for students looking for a job in finance. Take - for example - Alex Bank, a Sydney-based Fintech start-up.
Simon Beitz, co-founder and CEO of Alex Bank, believes that now is the perfect time to raise money as non-bank lenders retreat from a tough cost-of-funding market. In an interview with the Australian Financial Review, Beitz emphasised that Alex Bank is a provider of safe and “boring” banking services, which is attractive amid the current crisis of confidence in the sector.
The finance industry is vast and varied, with many different roles and sectors to choose from. Students who are interested in venture capital or specialised banking may need to look beyond SVB to find opportunities, but there are still many other banks and financial institutions that offer similar services. In addition, students who are willing to adapt and learn new skills may be able to find opportunities in other areas of finance, such as risk management or compliance.
The start-up-friendly bank and its ripple effect
SVB was known for its unique and specialised services, with a focus on venture capital and technology banking. The bank catered to the needs of startups and entrepreneurs, providing financing, strategic advice, and connections to investors and industry partners.
Early in the morning, March 10th 2023, words began spreading that SVB's shares had fallen more than 60 per cent when the bank said it planned to sell shares to raise capital after taking a $US1.8 billion ($2.7 billion) charge from the sale of some assets.
After a short haul of frantic depositors withdrawing their uninsured deposits in large quantities, the bank halted its operations. Only after a few days after the SVB collapse, the Switzerland-based multi-billion investment bank UBS struck a deal to buy its smaller rival Credit Suisse for about $US3.3 billion ($4.9 billion) in a share deal that includes extensive guarantees and liquidity provision.
The collapse of SVB may have a ripple effect on other financial institutions, particularly those that had close ties with SVB or relied on their services. This could lead to a tightening of the job market and a reduction in job opportunities for students looking to break into the finance industry. In addition, it could also result in a shift in the types of skills and experience that employers are looking for in job candidates, with a greater emphasis on risk management and compliance.
The global eco-system of SVB
SVB serves as a banking service provider for around 50% of all venture-capital-funded startups in the US, and a significant number of these startups invest in Australian-based startups, resulting in an interconnected web of business. As a result of this close-knit ecosystem, Australian entrepreneurs who secure funding and connections in Silicon Valley can experience rapid growth and attain billionaire status, while the collapse of SVB can instantly erase their fortunes. This realisation struck Lawren Humphrey - Mintable’s CEO during the intense and hectic hours following the news of the bank's collapse.
Mintable is a platform that focuses on community-based learning and growth for aspiring managers. Their aim is to motivate individuals to realise their maximum potential.
With 80% of its funds coming from SVB and 20% from CommBank Australia, “Obviously, losing that money [in SVB] would be quite distressing," Humphrey says.
And many start-ups - tens to hundreds of SVB-funded start-ups have reported experiencing the same thing. While this has essentially impacted graduates and aspiring CEOs in their journey to developing their own start-ups, it has also had great impacts on the market.
This is not to mention the collapse of Credit Suisse. The collapse could lead to a decrease in available job opportunities, particularly within the investment banking and wealth management sectors. Additionally, the reputation of the financial industry as a whole could be negatively impacted, leading to decreased interest and confidence among students considering a career in finance.
The collapse of Credit Suisse could lead to increased regulatory scrutiny and changes to industry practices, which could have further implications for finance students seeking to enter the industry. Ultimately, the full impact of the collapse of Credit Suisse on finance students is uncertain and will likely depend on a variety of factors, including the extent of the fallout from the collapse and the overall state of the finance industry at the time of graduation
Opportunities
Despite these challenges, there are still opportunities for students looking for a job in finance. Take - for example - Alex Bank, a Sydney-based Fintech start-up.
Simon Beitz, co-founder and CEO of Alex Bank, believes that now is the perfect time to raise money as non-bank lenders retreat from a tough cost-of-funding market. In an interview with the Australian Financial Review, Beitz emphasised that Alex Bank is a provider of safe and “boring” banking services, which is attractive amid the current crisis of confidence in the sector.
The finance industry is vast and varied, with many different roles and sectors to choose from. Students who are interested in venture capital or specialised banking may need to look beyond SVB to find opportunities, but there are still many other banks and financial institutions that offer similar services. In addition, students who are willing to adapt and learn new skills may be able to find opportunities in other areas of finance, such as risk management or compliance.
