Shannon Brandao
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"Techcrunch [excerpt]: On a weekday afternoon at Red Rock Coffee, the café known for spotting venture capitalists in #SiliconValley, one is likely to overhear a few conversations in Mandarin. With #China reopening its borders this spring following three years of COVID-19 restrictions, managers of U.S. funds in the country have been flocking to the Bay Area. While these trips were routine before the pandemic, they have now taken on a fresh purpose of discovering deals beyond China.
USD-denominated funds in China have long been drawing inspiration from Silicon Valley startups, using them as benchmarks for #investment targets back home. They would seek out the equivalents of Facebook, Amazon and Uber on the other side of the Pacific Ocean and hope they become winners in the country’s largely untapped internet market.
This dealmaking strategy of American funds in China has become less effective in the face of shifting global and domestic landscapes. Driven by a confluence of factors, from China’s crackdown on the #tech industry to escalating U.S.-China tensions, some of these investors are now turning their gaze to opportunities abroad, tracing the footsteps of a new generation of Chinese-founded startups that are expanding overseas.
Between a rock and a hard place
Since their entry into China in the late 1990s, American #venturecapital firms, led by powerhouses like Sequoia Capital, IDG Capital and GGV, have played a major role in funding high-risk, high-reward startups in the country’s consumer internet sector. This two-decade-long mutually beneficial relationship, however, now hangs in the balance as changes at home and abroad diminish the pool of investment opportunities for outside financiers.
In recent years, Beijing’s sweeping tech crackdowns have introduced a new sense of uncertainty to #investors. VCs fear that their portfolio companies might encounter a fate akin to that of Ant Group, whose colossal initial public offering was called off, and Didi, which weathered an extensive data security probe that eventually led to its delisting from New York. With China tightening its grip on overseas IPOs, investors who once relied on taking Chinese firms public in the U.S. are no longer assured of an exit channel.
In the meantime, Washington has stepped up restrictions on the flow of U.S. #money into China amid an escalating tech war between the two superpowers. In August, President Joe Biden signed an executive order barring U.S. investments in three strategically critical sectors in China — artificial intelligence, quantum computing and semiconductors."
#news #business #geopolitics