As Silicon Valley Bank collapses, many companies in China are feeling the financial pressure. Some have already had to declare bankruptcy, and others are worried that the bank’s failure will lead to an overall slowdown in the Chinese venture capital market. However, some startups see Silicon Valley Bank’s downfall as an opportunity to expand their businesses and become even more successful. They know that there is no room for anonymous investors in China’s high-growth startup scene, so they are prepared to work harder and raise more money than ever before in order to prove themselves to potential investors.
Over time, the bank has become known for its pragmatic approach to lending and its ability to connect startups with global investors. This reputation has made SVB an attractive option for Chinese companies looking to raise money from both domestic as well as international investors. In addition, the bank’s strong relationship with traditional banks allows startups access to a wider range of funding options than they would find at foreign-owned venture capital firms.
Some Chinese startups exposed to Swedish banking giant Svenska Värdepappersbank are urging their investors to withdraw money from SVB as soon as the bank announced its intention to sell shares in pursuit of more capital. Investors are advising the same to Chinese startups that may be affected by SVG’s potential sale, according to two founders TechGround talked with. Whether or not these startups will follow through on such a move is unclear; however, the potential for instability in the Swedish financial system following SVG’s sale could cause significant problems for companies that remain invested in it.
SVB is a multinational banking corporation with operations in over 120 countries. The company entered the Chinese market in 1999 and formed a joint venture with Shanghai Pudong Development Bank four years later. The JV has since carved out a niche in providing solutions for financial products and services within China, including liquidity solutions, trade financing, foreign currency deposits, wealth management and foreign exchange settlement and sales services.
The JV is likely trying to reassure its clients that their money is safe, as the turmoil surrounding the U.S. lender continues to unfold. While there may be some unease among some customers about how things are going at FDIC-insured bank, it seems that overall the majority of JV’s clients appear to be unaffected.
SVB was once a leading research firm, but it went bankrupt after losing a lot of money in the global recession. While other business firms bounced back, SVB experienced heavy layoffs and had to file for bankruptcy protection.
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