A new report discloses the Institutional Investors & private funds financing the rise of technology innovation in China, and other autocratic countries.
SAN FRANCISCO, CA / ACCESSWIRE / May 30, 2024 / Data compiled by nonprofit firm, Future Union, indicates that venture capital and private equity funds have been the core of China's innovation and technology emergence and the foundation of its geopolitical rise. The recently released report reveals the degree and scope of the technology success of China, and the implications of such technological power as the basis of creating geopolitical instability. The quantitative and qualitative evaluation reviews recent transactions, as well as preceding investments, and the associated private capital funds in light of the emergence of China, and other centrally-governed, autocratic countries. It also notes the role private capital has played in the foundational support and as the fulcrum in the creation of numerous, formidable quasi-public/private technology challengers to democratic, free market-oriented technology startups and companies. The report details how the competition over artificial intelligence, quantum computing, biotechnology, and semiconductors is accelerating. And how America and global rule of law, free market democracies are in competition against countries with a record of the selective application of law, given a lengthy pattern of reneging on privately negotiated, commercial intellectual property agreements and direct intellectual property expropriation through various state and commercial means, thereby, using the openness of the free market to their advantage.
In one example, data by the San Francisco-based nonprofit revealed that in the most influential ranking of venture capitalists, 46 of the top venture capital investors in the most recent listing have directly identifiable connections to China-related investments, providing a direct benefit to Beijing as it attempts to displace Silicon Valley in the race for the next big technological breakthrough.
The report, titled the "Rubicon Report," calls attention to funding that has fueled China's technology innovation resulting in competing, or leading, status in numerous technology sectors. Led by a venture capitalist and investment banker, the report details of the inner workings of the private equity and financial firms and shows through meticulous examples how many of these investors have prioritized Chinese startups at the expense of America's technological superiority.
The report specifically highlights the common occurrence of a venture capital fund investing in a startup, which typically precludes any investments in competing startups, U.S. or foreign. Thus, an investment in a Chinese-based startup would negate investment in any similar startup in the U.S., as the fund has a fiduciary duty to its limited partners to make all efforts - including devoting personal networks of nearly priceless importance and the accumulated, intangible knowledge and pattern recognition amassed over a career - to ensure that their investment prevails over the competition. This fact means a Chinese startup investment by a major, deep-pocketed venture capital fund, especially one with considerable clout in the industry, can have a chilling effect as other venture funds may be reluctant to invest in startups competing against their investment, an example of which occurred in the unmanned, aerial drone industry with Shenzhen DJI Technologies and video game industry with Tencent Games, creating binary competitions of Chinese startups pitted against those in the U.S. The report details the broad, and direct, relationships between Wall Street, global finance, and China's technology acceleration, including the U.S. Public Pensions, University Endowments, and Nonprofits/Foundations, with a considerable focus on the most critical areas of technology innovations: the earlier-stage private startup company investments that fuel the moonshot technology breakthroughs. Given the importance of the critical technologies and nascent stages, the report fixates on private investors - primarily venture capital and private equity - with specific scrutiny focused on the funds and institutional investors who have financed China's rise.
In a statement, Andrew King Executive Director of Future Union said:
"As our policymakers and elected leaders attempt to marshal the critical consensus among competing economic interests across constituencies, our data reveals that the private capital sector can, and must, do more. The data in the Rubicon Report shows that private capital market investors and institutional investors have been the largest beneficiaries of betting on Chinese startups. Yet such investments belie the risk, and have enabled a competitive, largely anti-free market, autocratic system to scale up the next generation technologies that ultimately serve as a mechanism to compete against America and other allied democracies."
As the data in the report concludes, the global financial community is the critical lever on which rogue autocratic countries continue to rely to support an array of global pursuits. While the world is placing greater scrutiny on the global private sector, corporate ties to supply chains and resources in China, and other adversarial countries, the data indicates that many U.S. investors have remained largely impervious to pressure and change. In the attached report, Future Union concludes that the fusion of technology, investment, and capital markets will be the critical determinant of which countries triumph in the geopolitical competition between democratic and anti-democratic forces in the future.
About Future Union
Future Union is a bipartisan organization designed to galvanize the private sector to address a new wave of emerging security and technology challenges facing the United States and its allies. We believe that democracy can no longer just exist to promote capitalism. Capitalism must be a force for democracy.
Future Union is intent on catalyzing the private sector to make a difference for technological and capital markets-led democracy, specifically, by taking a stance and action on limiting the economic power that Countries of Concern1 wield in the U.S. We aim to fuse private sector innovation and democratic-capitalism to ensure that economic competition and mutuality of contract under the equal, rule of law principles are abided by all competing countries.
As America and its allies vie to lead the next generation of innovation and technology, Future Union hopes to encourage a broad corporate re-evaluation and definition of risks to ensure democratic, free market principles remain at the core of geopolitical leadership and prevail against competing systems.
1 Countries of Concern are set forth as those with military capabilities that could threaten democratic national security. The most recent "foreign countries of concern" designation was made by the Secretary of State on December 29, 2023, and included the People's Republic of China, the Democratic People's Republic of Korea, Islamic Republic of Pakistan, the Russian Federation, and the Islamic Republic of Iran, among others.
Contact:
media@futureunion.co
Andrew King
www.futureunion.com
SOURCE: Future Union
View the original press release on accesswire.com
