Silicon Valley Bank collapse hits startups as far away as China
The Silicon Valley Bank fallout has ripple effects on Chinese startups, particularly those backed by U.S. dollar-denominated funds.
U.S. regulators shut down the bank Friday in what has become the country's second-biggest banking failure. Silicon Valley Bank had built its business on supporting tech startups, including those from China.
The online system for opening an account at SVB had allowed the use of a Chinese mobile number for verification, according to one Chinese tech startup founder who requested anonymity due to the sensitive nature of the situation. The source highlighted that they once had tens of millions of U.S. dollars at SVB.
He's since moved most funds out, but he said he still had more than $250,000 at SVB.
Along with the backing of a mainstream venture capitalist, a startup could open an account at SVB within a week, the source said in Mandarin, according to a CNBC translation. «Mainstream traditional banks, such as Standard Chartered, HSBC, Citi have strict compliance and it takes a long time to start a bank account with them. It can take up to 3-6 months,» he said.
The source, who founded a fintech company and two other tech companies, said venture capitalists liked working with SVB because the bank allowed the investors to see and approve how the startups used their funds.
«If there will be no SVB, it will harm the tech industry because there is no other bank which provides these two features,» the source said, referring to the speedy account opening for startups and visibility for venture capitalists.
Having a bank account with SVB allowed China-based startups to tap funding from U.S.-based investors, with an eye to a public offering in the U.S. Regulatory pressure from both Beijing and
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