US Congress Reports on CCP China Investors, Citing IPVM 6 Times
A recent Congressional report scrutinizes the foundational role of US venture capitalists in key PRC China technology industries that advance its military and support human rights abuses. IPVM research features prominently in the report.
5 Venture Capital Firms Made $3 Billion in Foundational Investment
On February 8, 2024, the House Select Committee on the Chinese Communist Party (CCP) released a 68-page bipartisan investigation examining how five US venture capital firms provided $3 billion in investment and expertise beginning in the early 2000s to PRC AI and semiconductor companies.
These firms went on to "facilitate human rights abuses including genocide, contract with the Chinese military, or strengthen the PRC's semiconductor supply chains and advance China's national security ambitions."
US venture capital involvement, the Committee argues, has been "critical" to the development of these key technology sectors in PRC China, which the US is now trying to impair with sanctions.
The VCs at issue are Sequoia Capital, GGV Capital, GSR Ventures, Qualcomm Ventures, and Walden International.
The report notes its limited sample size is intended to demonstrate the issue but that "our results significantly understate the amount of U.S. investment and expertise...there are billions of dollars beyond those captured in this report."
Early Investors in Alibaba, SMIC, PRC Military-Linked Firms
The report cites early investments in several PRC companies that are well-known today. GGV invested $5-$10 million in Alibaba beginning in 2003. Walden International invested $50+ million in SMIC beginning in 2001.
It also discusses companies that, while not household names, are prominent given their military ties. For instance, in 2006, Sequoia invested $48 million in Qihoo 360, a "military-civilian PRC enterprise focused on cybersecurity that the Commerce Department and Defense Department have blacklisted over its support for the PLA."
IPVM Reporting Cited
In total, the Congressional Committee cites IPVM six times, including examples shown below:
Megvii, a large PRC AI and facial recognition developer, is among the PRC companies of concern to the Committee and received investment from GGV Capital. In explaining Megvii's "involvement in surveilling and tracking Uyghurs in Xinjiang," the report cites IPVM's reports on Huawei and Megvii's development of "Uyghur alarms":
Another section examines how the PRC government uses surveillance, biometrics, and video analytics against its citizens, asserting that the PRC "uses its mass surveillance system to enforce political repression," citing IPVM's 2022 report on Hikvision's protest tracking and prediction project: Hikvision Wins PRC Police Project To Predict Protesters Entering Capital
In other parts of the report, the committee cites IPVM reports analyzing PRC companies, their financials, and their PRC government contracts and ties to the repression of Uyghurs.
- DeepGlint: Uyghur Detection, Race Analytics, PRC Police Deals
- Megvii Financials and Growth Examined
- Yitu, China AI Provider, IPO & Financials Examined
- DJI Lied About PRC Government Investments, Adheres To Xi Jinping Thought
Challenges of Investigating PRC Business
A notable aspect of the report is its discussion of the increasing difficulty of investigating businesses in China due to "an increasingly hostile environment as PRC authorities crack down on information flowing out of the country." Authorities have raided several Western firms in the last year. The business environment is increasingly hostile to Westerners, and the government has stopped publishing numerous economic figures.
The report explains how "multiple U.S. firms expressed apprehension to the Committee about cooperating" with its investigation given these problems. One firm said its "PRC personnel were 'scared to death' about providing basic fund information to the Committee...a representative of that firm recalled that in another case, one of his clients, a general partner, had disappeared - and re-appeared in a PRC prison."
IPVM is committed to exposing bad actions and actors both in the United States and around the world.