More than 20 investment firms have pledged not to take money from China and Russia
Founders now have a way to ensure their investors don’t get money from countries like China, Russia, Iran or Cuba.
more 20 investment companies They signed a clean capital certificate, showing that they have not and will not take money from foreign adversaries. Some of the companies that have signed include Marlinspike Partners, Humba Projectsand Snowpoint Ventures. “We must ensure that US adversaries do not directly benefit from our success, and publicly signing a clean capital certification is a way of adhering to that duty as a society,” Craig Cummings, a partner at Moonshots Capital, said in a statement.
This pledge was created by Future Consortium, an advocacy organization that works on issues related to foreign interference in the private sector. The pledge declares that new technologies, if in the wrong hands, could “cast a shadow of authoritarianism, misinformation, and division.”
Future UnionFacebook CEO Andrew King has been working on this pledge for about three years, but he fears Chinese interference for much longer. He recalled having long conversations with a friend at the Department of Defense about “how harmful China’s operation was to the United States,” and how the country was “influencing venture capital and private equity — through money and other incentives — to get into China.” Biotechnologies.”
If a company has Chinese investors, those investors — and thus the Chinese government — could have access to private information about portfolio companies, King said.
In the world of venture capital, this is mostly a hypothetical fear, but one that more and more people share. In September, The Financial Times reported That the FBI was investigating California-based venture capital firm Hone Capital for allegedly passing information to its Chinese investors. In February, Congressional Committee Report It called on five US investment firms to invest in Chinese companies, alleging that such investments have helped support the Chinese military and enabled human rights abuses in the country.
Congressman John Moolenaar, Chairman of the CPC Select Committee, applauded the pledge. “American national security and economic prosperity are at risk when American companies invest in our number one adversary or welcome Chinese Communist Party-backed investors to their boards,” he said in a statement. “Instead, thanks to these patriotic investors, there will now be a clean capital certification standard that Americans can use to evaluate their investments.”
Foreign capital in defense technology
It’s no coincidence that many of the companies on the list invest in defense technology startups. For defense companies, taking money tied to certain countries could jeopardize their ability to do business with the Department of Defense.
Among the roughly 20 companies that signed the pledge, larger funds that invest in defense, such as Andreessen Horowitz and Founders Fund, were noticeably absent. In general, neither company signs open letters such as the pledge, although a Founders Fund spokesperson clarified that the company does not take capital from any of the countries covered by the pledge. In the past, he had a partner, Delyan Asparuhov They are called companies Which takes Chinese capital as a “traitor.”
Likewise, a16z partners Kathryn Boyle and David Ulevitch wrote an op-ed in the Wall Street Journal last year explaining their position. “While some American investors previously pursued investments in hostile countries like China, it is now clear that they are betting on the wrong government.” books.
That may not have been careful research into one of the a16z’s arch-rival, Sequoia, which had a reputation as a major Chinese investment arm until it spun off that unit into its own division. The private entity in mid-2023.
The pledge itself is not perfect: it is a voluntary certification that does not include a formal auditing process to ensure that companies are true to their word. Even if a company can certify that its limited partners are not based in China, the limited partners themselves may still receive money from Chinese entities.
King stressed that this pledge is a first step, and that future initiatives may include an outside organization to vet the company’s investors or another certification that looks at the limited partners themselves.
He hopes that even a voluntary pledge will hold companies accountable. He said: “Self-testimony is public.” “And there are reputational risks and damage that can come from certifying and then your other limited partners or others finding out that wasn’t the case.”
