US Companies Under Fire: VC Firms Fueling Blacklisted Chinese Entities

A House select committee report has accused five US venture capital firms of funding Chinese artificial intelligence and semiconductor companies that are blacklisted by the US government. The report alleges that these firms have funneled billions of dollars into companies with ties to the Chinese Communist Party, potentially aiding in surveillance, oppression, and genocide. The accused firms are GGV Capital, GSR Ventures, Qualcomm Ventures, Sequoia Capital China, and Walden International. The report argues for robust sector-based restrictions on outbound investment in China and for prohibiting companies from investing in Chinese firms under sanctions or on red flag lists. The report warns of the grave threat these investments pose to US national security and human rights standards. It recommends codifying the Biden administration’s executive order on outbound investment into law and passing legislation to generally prohibit investments in sanctioned Chinese firms. The report sheds light on the intricate connections between the venture capital firms and the accused Chinese tech companies, but the exact nature of the assistance provided by the firms and their involvement in genocide is not detailed. The report’s findings could lead to increased scrutiny and regulatory action against the accused firms. The global venture capital industry finds itself at a crossroads as it grapples with the implications of these allegations.