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Chinese Cash Is Suddenly Toxic in Silicon Valley, Following U.S. Pressure

wsj.com

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Re: Chinese Cash Is Suddenly Toxic in Silicon Valley, Following U.S. Pressure

#51

Post by jeremyjh »

PakG1 wrote: post #34
antiviral wrote: post #16

Here is a snippet of the article, which I am posting under the Fair Use Act (I think you should all consider a subscription): "Silicon Valley startup Pilot AI Labs Inc. signed a Chinese-backed venture-capital firm as its first big investor. By last summer, Pilot AI wanted it gone. The U.S. startup hoped to sell more of its artificial-intelligence software to the U.S. government after working with the Pentagon, accord…

That's a horrible example. Of course that's not going to wash. Of course an investor would not be willing to sell back their stake before seeing the return they were looking for. If they wanted to sell AI software to the US GOVERNMENT, they should have found US investors. If they couldn't, then investors from US allied nations. They should have seen this coming a mile away, no?

Our relationship with China looked a lot different in July, 2016 when they took that investment.

Re: Chinese Cash Is Suddenly Toxic in Silicon Valley, Following U.S. Pressure

#52

Post by nostrademons »

bduerst wrote: post #37
omginternets wrote: post #27

Earlier quoted context omitted.

Could you elaborate? What made it toxic?

Not GP, but I've pitched to a crossover fund from China and they were super seedy. On top of having a questionable website and other investments, one of the red flags was they wanted their engineers to review our source code before/without signing any NDAs or commitments.

The concept of IP rights doesn't really exist in Chinese business culture. Your source code or any other proprietary technology is fair game.

I know startup founders that have raised Chinese money and not regretted it, but it's important that it be "dumb money", i.e. they give you cash and go away while you write an occasional investor update and grow the business. Active Chinese investors (i.e. anything where you give up board seats, decision-making power, strategic partnerships, etc.) are bad news. You want to be in a position where if your investors ask you for something you can just ignore them.

Re: Chinese Cash Is Suddenly Toxic in Silicon Valley, Following U.S. Pressure

#53

Post by robbrit »

devy wrote: post #49

For those who claimed Chinese cash is toxic, let me ask you an important question: what about Softbank's cash that primarily coming from Saudi? What about the Ivy League schools' endowment money donated by "morally unethical"(including but not limited to middle east) sources? Are you not going to send your children to Ivy League schools?

Japan (where Softbank is from) and Saudi Arabia are not geopolitical rivals to the USA. China is. This isn't about morality.

Re: Chinese Cash Is Suddenly Toxic in Silicon Valley, Following U.S. Pressure

#54

Post by techer »

devy wrote: post #49

For those who claimed Chinese cash is toxic, let me ask you an important question: what about Softbank's cash that primarily coming from Saudi? What about the Ivy League schools' endowment money donated by "morally unethical"(including but not limited to middle east) sources? Are you not going to send your children to Ivy League schools?

National security Vs not

Re: Chinese Cash Is Suddenly Toxic in Silicon Valley, Following U.S. Pressure

#56

Post by mooseburger »

scarface74 wrote: post #45
Causality1 wrote: post #33

Even if the Chinese government never interfered with a single company, I don't want Chinese corporate culture "leeching into the groundwater" as it were. They put Europe and the US to shame when it comes to not giving a damn. About safety, the environment, intellectual property, you name it.

And US venture capital cares about feeding starving children in Africa and other ways to make the world a better place?

That's just a tu quoque fallacy, as venture capital being indifferent to making the world a better place does not mean it is ethical to do business with China.

Re: Chinese Cash Is Suddenly Toxic in Silicon Valley, Following U.S. Pressure

#57

Post by driverdan »

ben_jones wrote: post #44
dcolkitt wrote: post #30

Earlier quoted context omitted.

Not that this isn't a valid concern, but is there really any evidence that this is happening in Silicon Valley? Hong Kong's a different matter because of just how comparatively dominating and close by the mainland Chinese market is compared to the tiny city state. But in the US tech sector, the Chinese market is at best an after-thought. We're also living through probably the strongest seller's market in history when…

As someone who just spends a lot of time in engineering slack channels, comments seem to alternate every other day on how hard or how easy it is to raise money. I've been through fund raising once (~5 years ago) as a small-time founder and can't help but believe the reality is somewhere in between gold-rush and desert.

If you're an SV sweetheart it's easy. Otherwise it depends on the business.

Re: Chinese Cash Is Suddenly Toxic in Silicon Valley, Following U.S. Pressure

#58

Post by elefanten »

jeremyjh wrote: post #51
PakG1 wrote: post #34

Earlier quoted context omitted.

That's a horrible example. Of course that's not going to wash. Of course an investor would not be willing to sell back their stake before seeing the return they were looking for. If they wanted to sell AI software to the US GOVERNMENT, they should have found US investors. If they couldn't, then investors from US allied nations. They should have seen this coming a mile away, no?

Our relationship with China looked a lot different in July, 2016 when they took that investment.

Ehhh.. no, not really. Not to anyone watching China beyond what appears in the mainstream headlines.

Things have been on a strong downtrend since 2012 and alarms have been ringing loud since around 2014.

Edit: Anyone writing a business plan including sensitive technology sales to the US government should DEFINITELY have seen this coming in 2016.

Edit2: Also, candidate Trump had loudly been yelling about China for over a year at that point

Re: Chinese Cash Is Suddenly Toxic in Silicon Valley, Following U.S. Pressure

#59

Post by tibaiiplus »

Writer of the article here. Totally get the frustrations with paywalls. Bottom line is feature stories like this take weeks, months, sometimes a year or more to produce. Sites without paywalls have to go for clicks (which are worth close to zero now that Google/Facebook gobble up most online ad budgets). If low value clicks are all you have, you end up like dailymail.co.uk.

If you want high value news, you have to pay someone a reasonable salary to report/write it.

Anyway, hope you enjoy and here's another fun part of the story:

The FBI office has conducted hundreds of briefings for companies on cybersecurity threats and economic espionage. It discourages people from using their regular smartphones and laptops when traveling in China and warns male U.S. executives to avoid “honeypot” espionage attempts by attractive women. “If you’re not a 10 in the U.S., you’re not a 10 in China,” officials say they’ve told the executives.

Re: Chinese Cash Is Suddenly Toxic in Silicon Valley, Following U.S. Pressure

#60

Post by wil421 »

thg wrote: post #12
ulfw wrote: post #7

Do all of you have WSJ and NYTimes subscriptions? I can't read any of those links submitted quite frequently

For WSJ submissions you can append ?mod=rsswn to the url and read the article that way. https://www.wsj.com/articles/chinese-cash-is-suddenly-toxic-...

Any chance WSJ or NYT devs read HN/Reddit and work on closing these loops? They only seem to last for so long. Thanks for this one.
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