Venture Capitalists Fret Over U.S. Bill Targeting Chinese Investors
By Sarah McBride and David McLaughlin
May 16, 2018, 2:42 PM
Venture capitalists are heading to Washington on a mission to save their lucrative relationships with Chinese investors. Proposed legislation in Congress, which would give the government greater oversight of deals involving foreign investors, is a central issue at an annual summit for VCs that kicked off Wednesday.
The meeting is well-timed. Next week, the Senate Banking Committee will consider the bill, which could make it harder for foreign firms to make investments in U.S. technology companies and slow down or block potential deals, including venture capital funding rounds. VCs fear that efforts to keep American inventions out of foreign governments’ hands will imperil their businesses.
The new law would expand the purview of an existing government committee, which reviews deals involving foreign companies and technology that could pose national security threats. In March, it threw up a major obstacle to a proposed takeover of U.S. chipmaker Qualcomm Inc. by Singapore’s Broadcom Ltd. before President Donald Trump blocked the transaction.
Lawmakers are on track to increase restrictions on foreign investment and may fast-track the measure by attaching it to the National Defense Authorization Act, a must-pass bill set for a vote in the coming weeks. The plan, backed by Defense Secretary James Mattis, serves as a bargaining chip in Trump’s trade negotiations with China, said Jim Jochum, a lobbyist who previously served on the Committee on Foreign Investment in the U.S. “It’s likely part of a big, grand bargain,” he said.
While the new bill doesn’t explicitly mention China, it is worded in a way that would have an outsized impact on investments by Chinese entities, mostly because the latest draft allows the government to exempt so many other countries. Potentially off the hook: countries that are members of the North Atlantic Treaty Organization and other allies.
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