Silicon Valley Bank Fallout Shakes Confidence at Asian Startups.
The failure of Silicon Valley Bank reverberated through startups and venture-capital firms from China to Singapore and India during a roller coaster few days that shook confidence in Asia’s over-reliance on U.S. tech financing.After frantic efforts trying to secure their money, some startup executives said the incident served as a warning despite U.S. authorities stepping in Sunday to shore up the bank’s customers.The SVB problem is an episode that reminds us to review our reliance on investment from the U.S.,” said Wang Guanyan, an executive of a Guangzhou, China-based startup that develops virtual-reality games.
On Sunday, the U.S. Treasury Department, the Federal Reserve, and the Federal Deposit Insurance Corp. guaranteed all deposits of SVB, which collapsed after an attempt to raise capital led to a bank run.SVB had proved popular with many Asian startups, especially Chinese companies in the biotech field and those with the variable-interest-entity structure, startup executives and analysts said.With SVB’s collapse, “those startups lose an important financing channel and need to find other ways to raise money, especially from U.S. dollar funds,” said Xinyao Wang, a healthcare equity analyst.
SVB has offices in Beijing, Shanghai and Hong Kong. In 2004, SVB led a delegation of U.S.-based venture capitalists, including Sequoia Capital founder Don Valentine to China to explore investment opportunities and network with Chinese entrepreneurs.In 2012, it established a joint-venture bank in the country with the Shanghai Pudong Development Bank, called SPD Silicon Valley Bank. The bank targets clients in areas such as life sciences, healthcare, and advanced manufacturing and offers services, including loans as well as yuan financing for offshore companies.SPD Silicon Valley Bank said in a statement on Saturday that it has been operating in a stable manner with an independent balance sheet.At least a dozen Hong Kong-listed companies, including many in biotechnology, said in exchange filings that they have banked with SVB. Many of them said the cash they held with Silicon Valley Bank was immaterial.
