DCM Ventures, a prominent venture capital firm in Silicon Valley, extended its investments into China since 1999, resulting in massive returns. In 2021, DCM expressed its plans to expand its strategy of investing in China, the United States, and Japan. Nevertheless, when the firm sought to raise funds for a new start-up focused venture last autumn, an internal memo viewed by The New York Times indicated that South Korea replaced China in the list of countries DCM planned to invest in. This shift is representative of a broader trend among other venture capital firms in Silicon Valley that are pulling back from investing in Chinese start-ups. The United States and China, due to their ongoing trade war and an escalating diplomatic crisis, are imposing regulations that restrict investing in each other’s economies. Recently, last year, Joe Biden signed an executive order inhibiting U.S. firms from investing in Chinese start-ups working on advanced technology. Also, a Congressional Committee further criticized five U.S. venture capital firms for investing in Chinese companies instrumental in human rights abuses and military arms development. Consequently, the value of deals for Chinese start-ups involving U.S. investors fell 88 percent, showing how the once forward-thinking global venture capital industry is now entangled in geopolitical conflicts influencing business decisions.
