The only novel I wrote was one about a Chinese venture capitalist who was from Silicon Valley. He funded companies and spied on them for his mother who ran a spy ring and lots of businesses in China. Today, Reuters has a story on venture capital in the Valley and it sounds like what I envisioned in that book.
Venture capital can be passive or active, depending on what is allowed by our government. I had a piece on trusts being used in port facilities and passive investment is lot like that. We only get from these arrangements what we are willing to devote in overseeing them. We don’t want passive investors bringing spies into the country to “audit” acitivities or “help” the developers beyond how to produce and sell the products they are funding. That is really hard to oversee. We want the companies to be successful, and they need capital to get there, but do we really need Chinese investors setting up shop in Silicon Valley and buying up our future? That is partly what the limitations being discussed on Chinese investment in the US are all about.
The Committee on Foreign Investment in the US (CFIUS) is not very well equipped to handle this kind of state-sponsored company incursions. The laws have been changed to help that aspect, but more needs to be done. CFIUS is not a regulator of foreign investment in the US, except for that aspect that deals with National Security. We hear that word thrown around a lot with such things as steel production being a National Security issue this year, when it has never been one before. This Silicon Valley financing is another matter. A struggling firm does not always check its backers backgrounds beyond the amount of cash they can provide. It is like taking money from the Devil, hoping for a chance to buy him out. Good luck with that.
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