The collapse of Silicon Valley Bank (SVB), with its assets seized by US regulators on March 10, could further fray the long-standing ties between US venture capital and China’s technology start-ups , hastening the end of one of the world’s most exciting wealth-creating collaborations. While SVB does not rank among the US banking industry’s top 10 institutions, it has played an important role for Chinese tech start-ups. They have used SVB for years as their default bank to open offshore accounts to handle funding received from US private equity and venture capital investors. Even after going public, these Chinese enterprises continued to maintain their offshore accounts at the Santa Clara, California-based bank. Besides easing the flow of US money into Chinese start-ups, SVB essentially served as a safe harbour for China’s rich tech elite to park their offshore wealth. But the speed of SVB’s collapse caught many of its Chinese clients off guard, with literally no time to respond when the Federal Deposit Insurance Corp seized the bank’s assets and ordered its closure last Friday. That development added more pressure on the increasingly fragile links across the Pacific, following the Biden administration’s move to tighten scrutiny of foreign investments last September and Beijing’s punishment of Didi Chuxing for data violations after it went public in New York in 2021. While there are other US lenders that Chinese companies can use for services similar to what SVB provided and any final financial losses should be manageable based on assurances made by US regulators like the Federal Reserve , the bank’s failure appears to have shattered these enterprises’ long-held belief that their money is bulletproof within the US financial system. As of Monday, a number of listed Chinese companies have made statements that claim their exposure to SVB was limited. Beijing-headquartered biotechnology firm BeiGene said it had US$175.5 million of uninsured deposits at SVB. Shenzhen-listed Ando Health Co, meanwhile, said its deposits at the US lender represented only about 5 per cent of its total financial assets, as the rest are with major banks such as JPMorgan, UBS, Goldman Sachs and Morgan Stanley. It is not hard to guess that these announcements represent just the tip of the iceberg of Chinese firms’ overall exposure to SVB. Firstly, individuals and non-public entities are under no obligation to disclose their exposure. Secondly, publicly-traded companies can choose not to make any disclosure at this moment. Still, it is interesting to note that some listed Chinese companies have been quick to declare that they do not have any deposits or other business links with SVB. Hong Kong-listed Meitu , a Chinese smartphone maker and apps developer, issued a statement saying it had no account or money at SVB “since the year 2020”. Why did Silicon Valley Bank fail and what does it mean? Meituan founder Wang Xing even posted on Chinese social media a screenshot of the Chinese food delivery giant’s bank account balance at SVB in July 2011, after his company completed its B-round of financing. It showed the sum of US$61.9 million as Meituan’s balance at the time. What appears most certain is that the Chinese public will not be sympathetic to businesses or individuals for the losses they have incurred with SVB. The country’s rigid capital account control has created a dual-track foreign exchange system in which those who are rich or resourceful enough are able to own offshore accounts without much trouble. Ordinary Chinese people, by comparison, cannot freely access foreign capital or foreign markets, and often must present documents to local banks to prove their need for foreign currency if the sum involved is more than US$50,000 a year. SVB once carried a magical cache by associating itself with the vast fortune and glory that entrepreneurs created in its Northern California home. At present, people want to distance themselves from the bank. The likely side effect of SVB’s collapse is that China’s tech elite will turn to banks in Hong Kong, Singapore and even Europe to help them raise funds and manage their wealth.