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Who’s the next U.S. funder to get tangled in Washington’s China sanctions

Who’s the next U.S. funder to get tangled in Washington’s China sanctions

Before last week, those paying close attention to who was sanctioned by the U.S. government for involvement with China’s repression of its Uyghur minority wondered if U.S. venture funds would be more deeply implicated.

The answer to that is yes. A new question is how deeply involved are corporate venture funds in firms that are, or might soon to be, on Washington’s so-called Entity List.

Last week, 14 new companies based in China (listed below) were added to the penalizing Entity List for allegedly enabling that nation’s ongoing, facial-recognition-supported persecution of religious and political minorities, including its Uyghur population.

Organizations and people named on the Entity List face export, re-export and in-country transfer restrictions that make normal economic activity with the United States unfeasible or impossible.

One of the 14, is facial recognition startup Deep Glint (also known as DeepGlint), which has been funded by major U.S. VC Sequoia Capital, according to reporting by The Verge.

Deep Glint’s work apparently is pretty good. It held the overall top spot for biometric accuracy in the ongoing evaluations conducted by the National Institute of Standards and Technology in January. NIST has so far tested 262 algorithms from more than 150 developers.

It could be argued that the executives behind Deep Glint are more eager than some to work with Beijing on ethically challenged projects. Once an AI darling in China, its original retail-focused management team missed and mismanaged multiple market shifts.

Trailing its peers (SenseTime, Yitu, Megvii and CloudWalk), the company jettisoned its founding CEO and brought in new strategic thinkers. Deep Glint now is more focused on technologies that Beijing wants more of: facial recognition and behavior-pattern analysis.

Sequoia also has funded Yitu Technology, another Chinese facial recognition company which is also on the Entity List, according to tech publication One Zero.

There also are companies that invest through their corporate venture capital funds in Chinese startups.

Qualcomm has had a stake in the unicorn SenseTime, another Chinese facial recognition firm on the Entity List, for example.

Some of the world’s biggest corporate venture funds are owned by Alphabet, Amazon, Intel, Dell, Cisco, Citibank, General Electric and General Motors.

The most recent figures, from 2018, show that Alphabet’s GV rank was most active globally. Intel Capital was No. 3, according to business publisher CB Insights.

The top 34 included, in order of activity, Qualcomm Ventures, Amazon Alexa Fund, Dell Technologies Capital, GE Ventures, Cisco Investments and Citi Ventures.

It is not immediately known if any are tied to companies on or destined for the Entity List, but all are motivated to excel in surveillance-related or -adjacent technologies

It would be difficult to find out what if any investments have been made.

During a March Congressional hearing on U.S. funding of China’s capital markets and military-industrial complex, Adam Lysenko, an analyst at Strider Technologies, said the United States protects corporate privacy more zealously than does China.

Lysenko has focused in his career on inbound and outbound China investment. Strider is an intellectual-property theft-prevention firm.

The 14 Entity List additions from China (all for activities related to the Uyghur campaign) are: Deep Glint (Beijing Geling Shentong Information Technology Co.), China Academy of Electronics and Information Technology, Xinjiang Lianhai Chuangzhi Information Technology Co., Leon Technology Co., Xinjiang Tangli Technology Co., Shenzhen Cobber Information Technology Co., Xinjiang Sailing Information Technology Co., Tongfang R.I.A. Co., Shenzhen Hua’antai Intelligent Technology Co., Chengdu Xiwu Security System Alliance Co., Beijing Sinonet Science & Technology Co., Urumqi Tianyao Weiye Information Technology Service Co., Suzhou Keda Technology Co. and Xinjiang Beidou Tongchuang Information Technology Co.

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