In recent years, Silicon Valley startups have increasingly attracted foreign investment, much of it from China. The jolt of capital has made it easier for young companies to raise money and for US investors to sell their stakes. That influx of foreign money is now under threat.
US lawmakers introduced legislation last week that would toughen regulatory scrutiny of foreign investors buying minority stakes in startups. Up to now, US officials have typically paid close heed to deals that would give foreigners all or a majority stake in US targets. The new bill would have implications for such deals as Tencent Holding Ltd’s 12% stake in Snap Inc and could hamper investments in the hottest areas of technology, including artificial intelligence, augmented reality and robotics.