SAN FRANCISCO – Friday, June 29, 2018, According to the latest reports, “Danhua Capital” showed its interest in the investment in Silicon Valley’s most promising startups, for in areas like drones, artificial intelligence, and cybersecurity. Around, 20 Silicon Valley venture capital firms have very close ties with Chinese government fund or state-owned entity.

A former member of CFIUS, Stephen Heifetz, “The perception is that a lot of the tech transfer of worry to the U.S. security establishment is happening in the startup world”.

Chinese entities, supporting with the passive role in big venture fund but along with the venture capital sources, it is said that Chinese government funds, play a more substantial role in the smaller venture firms they back by providing a greater percentage of their funding

“The window for some startups to raise money from China may be closing,” said Chris Nicholson, co-founder of AI company Skymind, which has raised money from Chinese Internet group Tencent Holdings Ltd and a Hong Kong family office.

The spokeswoman said, “We would not knowingly accept money from the Chinese government; we take investment from Delaware-registered, Silicon Valley-based venture capital firms”.

Larry Li, founder and managing partner at Amino Capital, said, “he took the money that was on offer when he launched his fund in 2012. He said he felt his firm wasn’t the kind of known quantity that could tap the big pensions and endowments”.

“We weren’t going to the Harvard endowment or Yale endowment; that’s like mission impossible,” Li said. “You need to have some special source of funds to get started.”

Danhua Capital, backed up by the Zhongguancun Development Group, a state-owned enterprise funded by the Beijing municipal government, has holdings in some of the most sensitive technology sectors, including its investments on data management and security company Cohesity, which counts the U.S. Department of Energy and U.S. Air Force among its customers. Drone startup Flirtey, which in May was selected by the U.S. Department of Transportation to participate in projects to help the agency integrate drones safely into U.S. airspace, is also part of the Danhua portfolio.

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