One Saturday evening in late July, more than 100 people attended an elaborate party in the lush garden of a mansion in Silicon Valley. The host was David Wei, a former chief executive of Alibaba, the Chinese e-commerce giant, and now a venture capital investor.

Guests, most dressed in white, were offered Panama hats as the bright California sun set and models walked a catwalk between large round tables covered with white cloths.

Many of the guests were current or former investors or entrepreneurs in China’s tech industry. Their conversations, like those at a number of similar gatherings in Silicon Valley this summer, bounced among three topics: how little confidence they have in China; how many opportunities artificial intelligence presents in the United States; and how they can get into the game on this side of the Pacific.

Chinese tech professionals are moving to Silicon Valley for opportunities they don’t believe are available in China anymore. They’re part of a wave of Chinese companies “going global,” as a growing number of businesses look outside their home country for growth.

With China’s economy in a lasting slump, investors and entrepreneurs are seeking the next China. They feel unwelcome by their government, which in recent years has sent an ominous message by clamping down on private companies.

The heightened tensions between China and the United States make it tough to operate as a Chinese-based business with international ambitions. There are opportunities in Southeast Asia, the Middle East and Africa. But only one other market can compare to China in size and potential. That’s the United States.

Most eager to make the jump are the venture capitalists. They used to be able to raise money from funds managed by America’s university endowments, retirement pensions and wealthy individuals, and then invest that money in Chinese start-ups.

They helped give rise to China’s tech industry, backing Alibaba, Baidu (internet search), Xiaomi (smartphones) and Didi (ride hailing). When these companies did public stock offerings, the venture capital investors reaped bountiful returns.

This is also the group now in the most awkward position. Neither Beijing nor Washington wants these people to invest in cutting edge technologies such as artificial intelligence, quantum computing and semiconductors. Both governments have made it difficult for the companies they back to list stock for sale in New York, their main way to cash in.

“We used to enjoy the best of both worlds,” said a venture capitalist who has worked in both countries for decades. “Now we’re losing on both ends.”

All of the 14 Chinese venture capitalists and entrepreneurs interviewed for this article are working in Silicon Valley or making plans to do so. Most of them requested anonymity because they don’t want to attract attention from Beijing or Washington.

The first thing one of them said was that her career in China was finished and that she was depressed. She had not made a single deal in nearly three years. She plans to focus on Silicon Valley but will need to spend time in China to wind up projects.

Another investor, who had not visited the United States much in the past decade, said that she would split her time between the two countries while looking for U.S. start-ups to back.

A third person, who relocated to Silicon Valley this year, was the most determined to settle down. He said he was selling his investments or dissolving his companies in China. He no longer feels safe there, he said, because the government jailed entrepreneurs or imposed sometimes huge fines on private enterprises.

He said most of his peers were reluctant to leave China completely and start over in a foreign country with a foreign language and a foreign culture. It has been tough for him, he added.

Tom Zhang, a well-connected human resources expert who has worked at several big tech companies in Silicon Valley, said he had met with many investors from China since last year.

“They have completely lost their direction, buzzing around like flies, not knowing what to invest in next,” he said.

There’s no doubt that these people belong to the privileged class – some live in fancy mansions. One home sat atop the Los Gatos hills with a red Ferrari, a Tesla Cybertruck and a few Audis and BMWs parked in the driveway.

Nonetheless, the frustrations of this moneyed set reflect a significant shift in the tech world: the bust of a financial pipeline known as U.S. dollar-denominated venture capital funds, and the demise of the market economy-driven model that propelled China’s tech growth.

Behind the shift is the vision that China’s leader, Xi Jinping, has for the country’s tech industry, one that is led by the government and aims for national self-reliance.

The ramifications of this approach for China’s drive for innovation and its tech rivalry with the United States probably won’t be clear for years.

But for now, on the human level, it’s a waste of talent for China. A generation of investors who spent two decades cultivating start-ups and shaping tech development have nowhere to apply their expertise.

The problem for China’s displaced investors is that the United States isn’t exactly a welcoming land.

Since 2018, the U.S. government has heightened its scrutiny of Chinese technology. A year ago, President Biden signed an executive order banning new American investment in key industries that could help Beijing’s military capabilities.

This has left many in Silicon Valley afraid of China.

Some brand-name venture firms will not consider putting money into a start-up that has taken funds from investors with China ties, a Chinese venture capitalist who had started two funds in the Valley told me. And that leaves founders reluctant to take money from transplanted Chinese investors for fear of scaring off later investors.

Only start-ups that are desperate for funding will take money from relocated Chinese investors. The few venture firms with China connections have rebranded themselves and take pains to explain that all the partners are U.S. citizens and that their funding mainly came from outside China.

One veteran investor said that a founder had refused to talk to him even after he explained that he had been a naturalized citizen for decades. People are acting with extra caution, the investor said.

But that’s not stopping other venture capitalists from looking at Silicon Valley as the promised land. They still have some slim hope, said the investor who has started two funds here. They probably won’t be able to land the next Alibaba, but they might find some opportunities to invest in small start-ups that might succeed, he added.

That might be better than nothing.

Li Yuan is a reporter with The New York Times. Copyright 2024, The New York Times.