SAN FRANCISCO - Chinese investors maneuvered around heightened geopolitical tensions to make record-level investments into U.S. startups in 2018, but increasingly hostile conditions will likely lead to a dropoff in Chinese funding for this year, according to a new report.
The robust investment comes despite policy headwinds from U.S. President Donald Trump’s administration, which has levied tariffs on $250 billion of Chinese goods and penalized telecoms companies Huawei and ZTE, which the United States accuses of spying. The report’s findings show the amplified role China has taken in the U.S. startup industry, even as it confronts a new U.S. law to limit access to bleeding edge technology.
Chinese investors, including big family offices, have walked away from transactions and stopped taking meetings with U.S. startups, Reuters has reported. The opacity of venture capital, a business with few required disclosures and layers of funds to conceal the source of money, makes it difficult to quantify the precise level of Chinese investment.
Investments from Chinese state-owned investors had all but disappeared by February of this year, according to Rhodium. In mid-2018, there were about five such deals each month. These investors, which are controlled by the Chinese government, would likely find it impossible to get approval for an investment in a U.S. company building sensitive technology, attorneys say.
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