Founders now have a way to ensure that their investors haven’t taken money from countries like China, Russia, Iran, or Cuba.
Over 20 venture firms have signed the Clean Capital Certification, attesting that they have not and will not take money from foreign adversaries. Some of the firms that have signed include Marlinspike Partners, Humba Ventures, and Snowpoint Ventures. “We must ensure that US adversaries do not directly profit from our success, and publicly signing the Clean Capital Certification is a way to commit to that duty as a community,” Craig Cummings, partner at Moonshots Capital, said in a statement.
The pledge was created by Future Union, an advocacy organization that works on issues related to foreign interference in the private sector. The pledge declares that new technologies, in the wrong hands, can “cast a shadow of authoritarianism, misinformation, and division.”
Future Union’s executive director Andrew King has been working on the pledge for about three years, but he’s feared Chinese interference much longer. He recalled having long conversations with a friend at the Department of Defense about “how deleterious the China operation was in the U.S.,” and how the country was “influencing venture capital and private equity — through money and other incentives — to get access to the critical technologies.”
King said that, if a firm has Chinese investors, then it’s possible that those investors — and then the Chinese government — could receive proprietary information about portfolio companies.
In the venture capital world, it’s mostly a hypothetical fear, but one that more and more people share. In September, the Financial Times reported that the FBI was investigating California-based venture capital firm Hone Capital for allegedly passing information along to its Chinese investors. And in February, a congressional committee report called out five U.S. investment firms for investing in Chinese companies, claiming these investments helped support China’s military and enabled the country’s human rights abuses.
Congressman John Moolenaar, chairman of the Select Committee on the CCP, applauded the pledge. “American national security and economic prosperity are put at risk when U.S. companies invest in our foremost adversary or welcome CCP-backed investors on their boards,” he said in a statement. “Instead, thanks to these patriotic investors, there will now be a standard for Clean Capital Certification that Americans can use to evaluate their investments.”
Foreign capital in defense tech
It’s not a coincidence that many of the firms on the list invest in defense tech startups. For defense companies, taking money that has ties to certain countries can jeopardize their ability to do business with the Department of Defense.
Of the roughly 20 firms that have signed the pledge, bigger funds that invest in defense are notably absent, like Andreessen Horowitz and Founders Fund. In general, neither firm signs open letters like the pledge, although a Founders Fund spokesperson did clarify that the firm does not take capital from any of the countries that the pledge covers. In the past, partner Delian Asparouhov has called firms that take Chinese capital “traitorous.”
Similarly, a16z partners Katherine Boyle and David Ulevitch penned a Wall Street Journal op-ed last year that made their stance clear. “While some American investors previously chased investments in adversarial countries such as China, it’s now clear they bet on the wrong government,” the pair wrote.
That may have been a not-so-subtle dig at one of a16z’s long-standing arch rivals, Sequoia, which famously had a large Chinese investment arm until it split that unit off into its own entity in mid 2023.
The pledge itself isn’t perfect: It’s a voluntary certification that has no formal vetting process to make sure the firms are true to their word. And even if a firm can attest that their limited partners aren’t based in China, the limited partners themselves might still take money from Chinese entities.
King emphasized that this pledge is a first step, and that future initiatives might include a third-party organization to vet the firm’s investors or another certification that looks into the limited partners themselves.
He’s hoping that even just a voluntary pledge will hold firms accountable. “The self attestation is public,” he said. “And there’s reputational risk and damage that could come from attesting and then your other limited partners or others finding out that it wasn’t the case.”
