US venture capital firms are putting pressure on tech start-ups to cut ties with Chinese backers as they anticipate tighter controls on foreign ownership from Washington.
In one example, HeyGen, a generative artificial intelligence start-up that was founded in Shenzhen during the pandemic but has since moved to Los Angeles, asked its Chinese investors — IDG Capital, Baidu Ventures, Sequoia Capital’s former Chinese venture capital arm HongShan and ZhenFund — to sell shares to US counterparts, according to multiple people familiar with the matter.
The AI video start-up, co-founded by former Snap software engineer Joshua Xu, completed a funding round led by Silicon Valley’s Benchmark in March, during which early-stage Chinese investors dramatically reduced their stakes through sales to US VC firms, these people said.