This is a subscriber-only article. Join Entrepreneur+ today for access

Learn More

Already have an account?

Sign in
Entrepreneur Plus - Short White
For Subscribers

China's Effect on the U.S. VC Game A VC pro explains the benefits and drawback of finding funding overseas.

By Sam Hogg

This story appears in the July 2015 issue of Entrepreneur. Subscribe »

Shutterstock

A major macroeconomic tipping point occurred in 2014: The New York Times reported that Chinese investment in the U.S. had surpassed U.S. investment in China. The investment in this case is general, not just venture capital. However, in my VC world, it has become increasingly common to see tech startups score financial backing from groups in China.

I view this as a double-edged sword. On one hand, money is the lifeblood of a startup, and fundraising traction in any form is crucial. On the other hand, if a business needs to go across the ocean to nab these funds, it leaves me wondering why.

There are two big reasons. The most common is that the startup founders happened to know angel investors in China. I can hardly fault that, since the first fundraising option for most entrepreneurs is to call on their network of friends and family (and fools). On top of that, our respective governments greatly encourage such investments.