The US is clamping down on investors from 'adversary' nations such as China. Here's what investors need to look out for.
CFIUS has become an unavoidable hurdle for corporate investors putting money in US startups, especially in ‘critical’ technologies. The Committee on Foreign Investment in the United States, a federal agency with authority to block foreign investments in US businesses, can kill an investment it deems risky to its national interests.
The Trump administration, with its ‘America First’ policy, has used the agency to increase scrutiny of investments by foreign investors from countries it deems adversaries, namely China. At the same time, the administration plans to fast track its processing of investments by allied nations.
“There is a lot of scrutiny. CFIUS has asked a lot of probing questions. Their questions have gotten more sophisticated over time,” says Matthew Rabinowitz, partner at law firm Pillsbury Winthrop Shaw Pittman. “The way they think about national security has evolved over time. I definitely see increased scrutiny, definitely more questioning, and definitely a desire to reduce bureaucratic and overly complicated mitigation agreements.”
Here is what non-US corporate investors should look out for if they are considering investing in the country's startups:
Kim Moore
Kim Moore is the editor of Global University Venturing and deputy editor of Global Corporate Venturing and produces video for the website.
