How East Asian investors are reshaping Silicon Valley

Silicon Valley venture capital has long been portrayed as the source model diffused to the world. Cities, regions, and countries around the world have cultivated local takes, inspiring monikers like Silicon Roundabout in London and Chilecon Valley in Chile.

However, the story is more dynamic than this simple narrative suggests. The Silicon Valley model itself is not only a exporter of venture models but is itself being shaped by external influences, in a process that we call return diffusion.

East Asian governments, corporations, and investors have been one of the biggest factors in this shaping. They not only absorbed Silicon Valley practices at home, but in an effort to link their locales with the reference model, they are changing Silicon Valley VC itself. Since the global financial crisis of 2008–09 in particular, the collaboration and coexistence of Chinese, Japanese, South Korean, and Taiwanese actors in Silicon Valley have contributed to three profound shifts: the growing prominence of corporate investors, the inflation of valuations and fund sizes, and the rise of national security as a core VC concern.

East Asian VC activity in the Valley has reconfigured its practices in ways that both strengthen its global character and make it more politically contested.

Methods: Mapping East Asian influence

To examine how East Asian VC activity has influenced Silicon Valley, we employed a mixed-methods approach, as published in our International Affairs article. First, we tracked Chinese, Japanese, South Korean, and Taiwanese government policies that purposefully fostered a presence in Silicon Valley, such as accelerators, overseas innovation centres, and co-investment funds. Second, we reviewed media coverage and commentary from “core” Silicon Valley VCs—Accel, Andreessen Horowitz, Benchmark Capital, Kleiner Perkins, New Enterprise Associates, and Sequoia—focusing on how they responded to (growing) East Asian involvement. Third, using Crunchbase data, we compiled transactions between 1991 and 2023 involving Silicon Valley-headquartered firms and investors from the four East Asian economies. We paid particular attention to co-investment activities, which reveal patterns of collaboration and coexistence. This triangulation enabled us to assess both the scale of East Asian presence and the impact on the Valley’s leading VC managers.

The findings: East Asia in the Valley

Our analysis of Crunchbase data shows an exponential rise in East Asian VC investments in Silicon Valley startups since the early 2010s. From 2012–2023, Chinese investors participated in 756 deals, Japanese investors in 651, South Korean investors in 395, and Taiwanese investors in 288. The proliferation of East Asian investors in Silicon Valley deals was not necessarily an organic occurrence; the growth in investment activity as well as the physical presence of lead firms in the Valley was also the result of governmental efforts. A form of “economic statecraft” striving to bolster domestic innovation capabilities through purposeful bridges to the Silicon Valley ecosystem. The headline activities and programmes for each country are as follows:

• Japan: Collaboration-focused, with METI and JETRO building bridges to Silicon Valley. SoftBank’s Vision Fund drove mega-rounds, valuations, and aggressive tactics. Japan has the largest corporate innovation outpost footprint in the Valley, as evidenced by Mind the Bridge.
• South Korea: Also collaboration-focused, with initiatives like the Korea Innovation Center and TIPS programme. Samsung and Hyundai have used their CVC arms to link Silicon Valley start-ups with global production capabilities. Their presence underscored the strategic value of CVC co-investment.
• Taiwan: Smaller in scale but deeply collaborative, leveraging longstanding Hsinchu–Silicon Valley ties. Initiatives like the Taiwan Innovation Entrepreneurship Centre add to the physical presence of Taiwan’s “new argonauts” in Silicon Valley. Taiwan’s position as the “Silicon Valley of Asia” and strong connections in the Valley have meant that there are fewer frictions. But given Taiwan’s likeness to the Silicon Valley approach, it has had a less visible transformation of the Valley. Taiwanese investors and corporations “fit” into the ecosystem.
• China: Emphasised coexistence through innovation centres and capital inflows. The scale of Chinese investment made it the leading East Asian presence, but geopolitical tensions reframed it as a security risk. By the late 2010s, co-investments with Chinese VCs prompted scrutiny and spurred defensive US policy shifts, including the increased use of the Treasury’s Committee on Foreign Investment in the US (CFIUS) to challenge investments.

Collectively, Japanese, Korean, and Taiwanese governments pursued coordinated, state-backed strategies to embed their start-ups and corporates into the Valley’s ecosystem. METI’s “Virtual Silicon Valley Study Group,” Korea’s Innovation Centers and KOTRA initiatives, and Taiwan’s Industrial Technology Research Institute (ITRI) all sought to integrate domestic entrepreneurs with Silicon Valley’s networks. These programmes focus on embedding start-ups and corporates into accelerators and VC partnerships.

China, meanwhile, pursued a different trajectory; rather than collaborating, efforts were made to build a presence. This approach was, at least in part, due to the politicisation of Chinese investment, which would have made it more difficult for the Chinese government to be openly involved in these efforts. Chinese coexistence in the Valley grew through innovation centres and large-scale capital injections, particularly between 2012 and 2018, engaging overseas Chinese talent and companies. China’s strategy involved establishing innovation outposts like ZGC Innovation Center while channeling large volumes of capital into Silicon Valley start-ups. Coexistence created physical presence and deal participation but without the same institutionalised collaboration with Silicon Valley stalwarts as its regional counterparts pursued.

East Asian corporate VCs dominate these activities. Samsung, SoftBank, Mitsubishi, Tencent, Baidu, LG, Naver, and others established themselves as regular participants in Silicon Valley rounds. Government-backed funds have also played significant roles—Japan’s Innovation Network Corporation of Japan, Taiwania Capital, and Korea’s KB Investment are examples. Like Taiwan’s new argonauts in Silicon Valley, Chinese, Korean, Taiwanese and, to an extent, the Japanese community in Silicon Valley has also supported these links.

East Asia’s contribution to Silicon Valley VC’s evolution

The impact of East Asia’s return diffusion is visible in how core Silicon Valley VCs adapted their strategies. We identify three major outcomes:

Corporate VC normalisation:  Corporate VC (CVC) is not new to the Valley, but the influx of East Asian corporates—Samsung, SoftBank, Hyundai, SK Telecom—has raised its profile.

As our work on Startup Capitalism in East Asia reveals, corporate engagement with startups has often been framed not as a vehicle for creative destruction but as a means of revitalising incumbent giants. In Japan and South Korea in particular, governments and firms have positioned start-ups as sources of innovative DNA that can be injected into national champions such as Sony, Toyota, Samsung, and Hyundai. Corporate venture capital arms, accelerator programmes, and state-backed initiatives have cultivated ecosystems where start-ups are valued less as independent challengers to established firms and more as complementary partners, supplying new technologies, talent, and entrepreneurial culture that can be absorbed into Japan’s keiretsu and Korea’s chaebol structures. This corporate-centred model of startup engagement exemplifies how East Asia has adapted Silicon Valley’s venture capital template to strengthen existing industrial leaders rather than replace them.

This corporate flavour of VC is what East Asia has brought back to the Valley. These CVCs offer startups distribution networks, manufacturing capacity, and strategic partnerships. Their prominence has helped normalise CVC as limited partners and co-investors, contributing to the Valley’s broader shift from a pure-play financial model to one in which strategic investors hold growing sway.

Bigger funds, higher valuations:  SoftBank’s Vision Fund best epitomises the scale effect. Launched in 2017 with approximately US$100 billion under management, it forced established VCs to scale up in response. Sequoia raised an $8 billion growth fund in 2018 to avoid losing portfolio companies to SoftBank. The Vision Fund’s “mega rounds” inflated valuations and Masayoshi Son’s style helped normalise new norms for big checks and late-stage investing. More broadly, Japanese and South Korean corporations reinforced a trend toward larger deals and impatient practices, such as “exploding term sheets”, where founders are given very short deadlines to accept investment agreements.

The explicit rise of national security concerns: Chinese co-investment has heightened US national security concerns in venture capital. Whereas Japanese, South Korean, and Taiwanese involvement raised little alarm, Chinese participation was increasingly framed as a channel for technology transfer. This concern deepened after 2017, when core Silicon Valley VCs began advising start-ups to avoid Chinese capital to reduce regulatory risk. Some firms even split operations—Sequoia spun off its China arm as HongShan in 2023. This geopolitical pressure has nudged Silicon Valley VCs toward defense and dual-use technologies. Andreessen Horowitz launched its American Dynamism fund in 2023, while Sequoia made its first defense-tech investment the same year. The result: national security is now a defining lens in venture capital strategies.

Silicon Valley as an evolving model

Silicon Valley is not just the source of global venture models; it is a recipient of external influence. East Asia’s return diffusion has helped normalise corporate venture capital, raise valuations and fund sizes, and inject geopolitics into the Valley’s investment calculus.

As governments and lead firms strive to compete at the technological frontier, it’s not simply about “copying Silicon Valley”. Especially in bids to contend in global “hard tech” domains, like energy infrastructure and smart shipbuilding, a “whole of systems” approach is pursued in which governments, corporations and startups collaborate. This version of startup capitalism is designed to foster national capabilities, but it has global implications and connections. It often involves engagement with Silicon Valley as a means of accessing cutting-edge technologies. Interestingly, recent announcements by Western companies opening subsidiaries in China, especially close to leading-edge robotics capabilities in Hangzhou, suggest flows in the opposite direction. Colocation in China is now increasingly a means of accessing world class supply chains and capabilities, in a way analogous to a Silicon Valley outpost has for decades.

This hard tech turn stands to further fuel how practices circulate, are reconfigured, and ultimately reshape the original model: Silicon Valley. As East Asian CVCs continue to invest across global hubs, and as US national security policy evolves, Silicon Valley’s venture ecosystem will remain in flux. Silicon Valley practices are defined by global collaboration and coexistence, not only its own homegrown dynamics.

Robyn Klingler-Vidra is Associate Professor of Political Economy and Entrepreneurship and Vice Dean, Global Engagement, King’s Business School, King’s College London and Ramon Pacheco Pardo is Head of the Department of European & International Studies and Professor of International Relations, King’s College London.