In a significant shift in the venture capital landscape, U.S. startups are increasingly distancing themselves from Chinese investors. This move comes as firms anticipate a tightening of foreign ownership regulations by U.S. authorities.
What Happened: U.S. venture capital firms are urging tech startups to distance themselves from Chinese investors in light of expected stringent foreign ownership regulations from Washington, the Financial Times reported on Friday.
One such case is HeyGen, an AI startup initially established in Shenzhen, which has relocated to Los Angeles. The company has requested its Chinese investors, including IDG Capital, Baidu Ventures, Sequoia Capital's former Chinese venture capital arm HongShan, and ZhenFund, to divest their shares to American entities.
In March, HeyGen finalized a funding round led by Silicon Valley’s Benchmark, where early Chinese investors significantly reduced their holdings by selling to ...