A Dismal Future For US-China Venture Activity?

A Dismal Future For US-China Venture Activity?

Since the beginning of 2014, Chinese investors have participated in more than 900 VC deals with US-based companies. This year alone, they have participated in almost $3 billion worth of US financings, according to the PitchBook Platform. However, deal trends between the trading partners may change dramatically, as the US government is considering measures to increase scrutiny of Chinese investments into specific US industries.

If amendments to the current parameters are made, the US would heighten the role of the Committee on Foreign Investment in the United States—the agency that monitors and reviews foreign acquisitions of US companies. CFIUS halted several Chinese acquisitions of US high-end chipmakers under the Obama administration.

Republican Sen. John Cornyn of Texas is drafting legislation that would allow CFIUS to block certain investments by granting the Pentagon the ability to block an investment that originates from a nation deemed a threat to US security, per a Reuters report. US government officials are reportedly fearful of the consequences from Chinese investment in Silicon Valley, particularly in AI, drones and robotics.

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Chinese investors do have a history of investing heavily in these sectors. Chinese tech giant Tencent has been a particularly active investor in US-based, VC-backed companies, participating in rounds for at least four AI startups, per PitchBook data. And just last month, the Shenzhen-headquartered corporation opened an AI research lab in Seattle, led by former Microsoft principal researcher Yu Dong.

Among the other Chinese investors active in the US are Cherubic Ventures, Horizons Ventures, IDG Capital and GSR Ventures, all of which also already have US AI companies in their portfolios.

To illustrate the kinds of investments US-based startups are securing from Chinese VCs, we identified some of the larger deals with Chinese investor participation in US AI companies since the beginning of 2014.

US-China Venture Activity

Related coverage: How terse relations are impacting Chinese corporate M&A activity in the US. PitchBook subscribers can access the full data on Chinese investment activity in the US.

Article by Kate Clark, PitchBook

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