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March 24, 2019
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California moves toward healthcare for more, not yet healthcare for all

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 It was way easier for candidate Gavin Newsom to endorse single-payer health care coverage for everyone than it is now for Gov. Newsom to deliver it.

Yet hardcore advocates say they’re pleased with the moves he’s made thus far—even if it may take years to come to fruition.

“This is a governor that is operating from a compass of action,” said Stephanie Roberson, government relations director for the politically powerful California Nurses Association, which hasn’t exactly been known for its patienceon the issue.

Newsom has taken two tacts. He’s asking the Trump administration to let the state create its own single-payer system offering coverage to all Californians—a move almost everyone regards as a very long shot. And he’s also pushing specific ideas to expand health care coverage to hundreds of thousands of still-uninsured Californians—a move that seems much more do-able.

During his campaign, Newsom promised the nurses that he would make it happen. But the state can’t do it alone. That’s why he sent a letter to the federal government right out of the gate, asking the administration and Congress to set up an “innovation waiver” to allow California to create its own single-payer system.

Experts say there is little chance the Trump administration will give the state the go-ahead on this.

“He’s making a statement and sometimes making statements is important—even if there’s little chance of making progress in the immediate future,” said Gerald Kominski, senior fellow at the UCLA Center for Health Policy Research. “It’s a way of drawing a line in the sand.”

It’s also a way to stave off criticism from advocates, said Jesus Ramirez-Valles, director of the Health Equity Institute at San Francisco State University. “He can say ‘I tried it’ and there is no risk on him. If he doesn’t do what he promised, then he is risking opposition.”

Federal permission would also require Congress to support a new waiver system—one that would allow the state to redirect funds that usually go to the federal government, such as Medicare income taxes, to a state funding authority that would manage and pay for a single-payer health care system, Kominski said. Current waiver systems do not allow for this type of financial management by the state. Other states have used existing waiver programs for permission to set prices or to implement additional requirements, but not to collect federal money.

“You have to ask for the money,” said Roberson of the nurses union. “We are not going to sit on our hands and hope something is going to happen. This strengthens the governor’s commitment to Medicare for all.”

Meantime, Newsom is tackling the block of 3 million uninsured California residents by chipping away at the edges—proposing spending to help struggling middle-income families buy health insurance, and providing state coverage to some undocumented young adults.

He’ll need approval from the Legislature, now a supermajority of Democrats, many of whom have supported similar ideas in recent years.

Two intertwined proposals in his budget would offer hundreds of thousands of middle-income families additional state subsidies to buy health insurance, and require every Californian to obtain health coverage or pay a tax penalty.

This “state mandate” would replace the controversial federal mandate—a central component of the Affordable Care Act, or Obamacare— that the Trump administration recently canceled. A few other blue states were quicker to create a replacement state mandate, but California’s progressive lawmakers were wary of penalizing people who failed to buy health insurance unless the state also cushioned the blow by offering people more subsidies to lower the costs.

Newsom also proposes to use $260 million in state funds to extend Medi-Cal, the government health program for people who can’t afford insurance, to low-income undocumented immigrants ages 18 to 26.

It’s a classic “Resistance State” action for Newsom, as California tries to counteract the Trump administration’s federal moves to undermine Obamacare. Last year a joint UCLA and UC Berkeley study found that the uninsured rate in California would rise to nearly 13 percent by 2023 if nothing is done at the state level to prevent it.

Since the Affordable Care Act known as Obamacare was enacted, California’s uninsured rate has dropped from about 17 percent to roughly 7 percent. Roughly half of those 3 million remaining uninsured are undocumented immigrant adults who don’t qualify for assistance.

If Newsom’s plan is approved, California would offer additional subsidies to families that earn between 250 and 400 percent of the federal poverty level and already receive some federal help. The state would also start offering state-sponsored subsidies to households that earn between 400 and 600 percent of the federal poverty level, up to $150,600 for a family of four, who currently do not qualify for any assistance. Families that earn above 400 percent of the federal poverty level make up 23 percent of the state’s uninsured, according to data from the UCLA AskCHISprogram.

The federal poverty level for 2019 is set at earnings of $12,140 for one person and $25,100 for a family of four.

The budget does not include cost estimates for the additional subsidies but Newsom intends to pay for the expansion by having the state collect penalties from Californians who forego insurance.  His budget proposal estimates that the mandate penalty could raise about $500 million a year, similar to what about 600,000 Californians paid to the federal government when it had a mandate and collected its own penalties.

Peter Lee, who directs the state health insurance exchange Covered California, praised Newsom’s proposals during a recent board meeting.

“Not only does his initiative propose an individual penalty show courage,” he said, “it shows some thoughtfulness about the challenges that middle-class Americans face.”

Enrollment for Covered California, which recently ended, was down 15 percent over last year. Lee said the elimination of the federal penalty is partly to blame.

A draft affordability report Covered California is preparing for the Legislature concludes that if Newsom’s two proposals—expanded subsidies and a mandate—are adopted, enrollment could rise by nearly 650,000 people.

Funding the subsidies with penalties is, of course, a bit of a Catch-22: The more successful California is in getting people to obtain health care, the smaller the penalty fund to pay for the subsidies that help fund that care.

“You’re accomplishing your goal, but you’re taking away revenue,” Kominski said.  “This is the kind of problem we should be happy to have.”

The conundrum is reminiscent of the state’s tobacco tax, which was intended to deter people from smoking. Success has meant a drop in the amount of money the tax brings in.

Despite what many see as dismal prospects for single-payer in California so long as the Trump administration can quash the state’s waiver request, the California Nurses Association is undaunted. They’re working on a soon-to-be-introduced single-payer bill, more detailed than the version that died in 2017. That one carried a $400 billion price tag, more than three times the state’s annual budget, lacked support from then-Gov. Jerry Brown and was scant on details. The new version, nurses union rep Roberson said, will be specific about how single-payer would work and how it would be paid for.

“We’re not eradicating providers, we are not seeking to dismantle hospitals,” she said. “The fundamental structure of healthcare delivery will stay in place, what we are changing is how healthcare is financed.”

And if the Trump administration rejects the waiver request? Roberson sees other paths to a state single-payer system, including petitioning the Centers for Medicare and Medicaid, or trying to set up a system under Affordable Care Act provisions.

If the nurses union and other single-payer advocates end up pursuing those other avenues, the question becomes whether Newsom will as well.

CALmatters.org is a nonprofit, nonpartisan media venture explaining California policies and politics.

News Source = techcrunch.com

Hola Code tackles the real migration crisis

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After spending eight months in an immigration facility in the United States, Abimael Hernandez made the tough decision to return to Mexico.

He had spent 14 years in Florida and was leaving behind his wife and three children to return to Mexico so that he could go through the process of returning to the United States legally.

Hernandez didn’t want to live in fear of being pulled over by police, he longed to own a car in his name and he didn’t want his immigration status to be illegal any longer.  

Upon his return to Mexico, Hernandez had worked in construction, call centers and sold CDs before finally being given an opportunity that made a return to the United States less appealing. Hernandez now works as a software developer at Ignite Commerce in Mexico and has integrated well into the country that he at first struggled to identify as home.

Hernandez’s struggle to adjust and adapt to life in a new country mirrors that of other migrants who are returning to Mexico. And ongoing U.S. government attempts to put an end to the DACA program instituted under President Barack Obama, an initiative which protected as many as 800,000 unauthorized migrants that had come to the United States as children,are pushing many others along the same path.

For the people facing an increasingly hostile environment for migrants who choose — or are forced — to return to Latin America, little support awaits.

What tends to lie in store for these deportees and returnees in Mexico is usually low paying service employment. For those with an undocumented status especially, no collateral in Mexico leads to problems in accessing finances, whilst having spent the majority of their lives in the United States, barriers in the Spanish language mean some returnees fail to be accepted into the Mexican education system. 

Though there are some government initiatives aimed at supporting deportees by providing shelter and food, this usually bilingual cohort is prone to unemployment, as well as the mental struggle assigned to the frustrations of reintegrating into a country that many can’t identify with.

It is the hardship of reintegration that inspired the foundation of Hola Code, the only Mexican startup of its kind that currently runs in the country. Founded by CEO Marcela Torres just last year, Hola Code is coined as hackers without borders and is a startup that offers a coding boot camp for migrants, ensuring that this young generation, new to Mexico, does not slip under the radar.

Geared at supporting the integration of deportees, the startup is prepping Mexicans to enter into a high-demand sector through an intensive five-month software development training programme that gives the students qualification, even though many have started from scratch.

‘‘We don’t know of any social enterprises or even regular startups that are actually tackling migration in Mexico,’’ Torres recently told TechCrunch. Although migration and deportations continue to make headlines, it appears that Hola Code might be the only Mexican startup trying to do anything about it.

Backed by San Francisco-based Hack Reactor, the Mexican organization costs nothing until graduates have secured a full-time job, and pays their students a monthly stipend without any bureaucratic red tape.

Collectively venturing into Mexican society with peers in a similar position, most Hola Code students also don’t plan to return to the United States and want to use their skill set in the ever-growing Mexican tech ecosystems. For former student Hernandez, he remains grateful for the support network that Hola Code became for him.

‘‘If Mexico had more opportunities like Hola Code I think returnees would definitely think about not going back to the United States and other countries,’’ he said.

The question now remains as to how international policies will continue to affect Latin American families in the future.

‘‘You create the program in the hopes that one day that you will run out of work,’’ CEO and co-founder Marcela Torres ambitiously explained.

MISSION, TX – JUNE 12: A Central American immigrant stands at the U.S.-Mexico border fence after crossing into Texas on June 12, 2018 near Mission, Texas. U.S. Customs and Border Protection (CBP) is executing the Trump administration’s zero tolerance policy towards undocumented immigrants. U.S. Attorney General Jeff Sessions also said that domestic and gang violence in immigrants’ country of origin would no longer qualify them for political-asylum status. (Photo by John Moore/Getty Images)

The bittersweet reality is that Hola Code has, in fact, blossomed within the past year with now over 400 monthly applications from Mexicans and also Central American migrants that are seeking refuge in the country. Although the organisation celebrates the achievements of their alumni, who tend to quickly ascend into well-paid tech jobs across Mexico, the coding boot camp is never short of work and is now looking to open an office in Tijuana to be closer to the border.

The journey for the startup’s female founder, one of a small number of women in Mexican tech leadership, has also not been an easy feat.

‘‘It’s very difficult for a woman that has designed a business plan and has ideas to be taken seriously,’’ Torres explains. ‘’It took me a long time to find the original investors that would believe in my idea and in my capacity, as well, to run the organization because this is the first startup that I have executed.’’

The cultural burdens that still exist in Mexico is a reality that deters many women from entering into the entrepreneurial scene within the country. From finding investors to promoting an idea, it is the issue of being taken seriously which is most effective at stalling Mexico’s female entrepreneurs.

‘‘I think that it’s important for younger women to start seeing us out there trying to take risks and thinking that they can do it as well. Even if they’re not successful, that it’s something that is available and achievable for them.’’

Confronted by her own hurdles in becoming the tech leader of Hola Code today, however, her organization does much more than just in-depth coding. From encouraging young Mexican women to leap into business and tech, to helping each student find a job, Torres speaks of the hope, security, and routine that every Hola Coder gathers as they become immersed in Mexican life through this community.

‘‘Helping them navigate the expectations of  how to start a career in tech is one of the things that we work on and therefore it means that they develop the right skill set, and once they finish the program, to be able to successfully jump into big areas such as banking.’’

MCALLEN, TX – JUNE 12: Central American asylum seekers wait for transport while being detained by U.S. Border Patrol agents near the U.S.-Mexico border on June 12, 2018 in McAllen, Texas. The group of women and children had rafted across the Rio Grande from Mexico and were detained before being sent to a processing center for possible separation. Customs and Border Protection (CBP) is executing the Trump administration’s “zero tolerance” policy towards undocumented immigrants. U.S. Attorney General Jeff Sessions also said that domestic and gang violence in immigrants’ country of origin would no longer qualify them for political asylum status. (Photo by John Moore/Getty Images)

Former student Miriam Alvarez is now a software engineer for SegundaMano. Growing up in the United States, Mexican Universities did not accept her US documents and she too began working in a call centre before hearing about the project, applying just days before the application deadline. ‘‘It’s ok to not know everything, but you should always be open to trying new things and learning something new,’’ Alvarez said, speaking of the broader messages that Hola Code delivers.

The overwhelming lessons that all Hola Code’s alumni praise is how the boot camp delivers more than just coding, but also important life skills that allow for the transition to Mexico to be easier. Through reasoning and problem solving, many are grateful for the structure and direction that Hola Code provides Mexicans new to the country.

Though many of their students had joined Hola Code feeling ‘American,’ the values that the group provides adds to the larger picture of Mexico’s growing tech scenes.

‘‘The biggest challenge for the tech sector in the country is access to human capital and the second one is retaining the talent.’’  By fine tuning the country’s coding talent pools with bicultural young developers that speak English, Spanish and also JavaScript, the organisation contributes to growing tech hubs such as Tijuana, Guadalajara and Mexico City which are increasingly gaining global attention.

Hola Code is one of just a few life-changing organisations filling the gap in an immigration story that is seldom covered by the media.

Providing social mobility to people that have been forced to return through education, employment and exposure to tech pioneers, Hola Code’s alumni are spreading the message of integration through education far and wide across the globe.

As long as the fragility of migration continues to be tested, however,  Torres and her team have work to do in their mission to produce Mexico’s next pioneering coding generation.

News Source = techcrunch.com

That GoFundMe to build a border wall is issuing $20 million in refunds

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A Trump-inspired GoFundMe campaign that raised $20 million to ostensibly to build a wall on the southern U.S. border will refund every cent. Run by Brian Kolfage, a veteran with a track record of questionable business practices, the project defied all logistical considerations with its proposal for a “simple and straightforward” plan to build the wall. That didn’t stop the fund from attracting the attention of 337,559 donors at the time of writing.

Surprising perhaps no one beyond its donors, the campaign collided with reality, with Kolfage coming to the realization that “the federal government won’t be able to accept our donations anytime soon” given that there is no actual mechanism through which it could do so. On the campaign page, Kolfage newly disclosed his plans to form a nonprofit, “We Build The Wall, Inc.” that would hold onto the donations until the federal government is able to accept them or until all of the donors eventually forget the project altogether.

Initially, donors were told that their money would be refunded if the goal for the project was not met. On December 22, the project’s language changed, removing any mention of refunds if the goal was not met. With that, the project appears to have run afoul of GoFundMe’s policies.

Kolfage claims that he has formed an advisory board that features war privatization enthusiast and brother of the Secretary of Education Erik Prince and the also ethically questionable former Kansas Secretary of State Kris Kobach who lost his race this past November.

While Kolfage might be in good company, it sounds like GoFundMe will be automatically handing back every bit of the $20 million he raised before getting called out changing the terms of the campaign. Donors who still want their money to go to Kolfage will need to opt in specifically.

“If a donor does not want a refund, and they want their donation to go to the new organization, they must proactively elect to redirect their donation to that organization,” GoFundMe told The Hill. “If they do not take that step, they will automatically receive a full refund.”

News Source = techcrunch.com

Indonesia e-commerce leader Tokopedia raises $1.1B from Alibaba and SoftBank’s Vision Fund

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Indonesia-based e-commerce firm Tokopedia is the latest startup to enter the Vision Fund after it raised $1.1 billion Series G round led by the SoftBank megafund and Alibaba.

SoftBank and Alibaba are existing investors in the business — the Chinese e-commerce giant led a $1.1 billion round last year, while SoftBank recently transitioned its shareholding in Tokopedia to the Vision Fund. That latter detail is what held up this deal which had been agreed in principle back in October, TechCrunch understands.

Tokopedia didn’t comment on its valuation, but TechCrunch understands from a source that the deal values the company at $7 billion. SoftBank Ventures Korea and other investors — including Sequoia India — also took part in the deal. It has now raised $2.4 billion from investors to date.

The deal comes weeks after SoftBank made a $2 billion investment in Coupang, Korea’s leading e-commerce firm, at a valuation of $9 billion. Like Tokopedia, Coupang countered SoftBank as an investor before its stake transitioned to the Vision Fund.

Founded nine years ago, Tokopedia is often compared to Taobao, Alibaba’s hugely successful e-commerce marketplace in China, and the company recently hit four million merchants. Tokopedia said it has increased its GMV four-fold, although it did not provide a figure. Logistics are a huge issue in Indonesia, which is spread across some 17,000 islands. Right now, it claims to serve an impressive 93 percent of the country, while it said that one-quarter of its customers are eligible for same-day delivery on products. That’s also notable given that it operates a marketplace, which makes coordinating logistics more challenging.

The firm plans to use this new capital to develop its technology to enable more SMEs and independent retailers to come aboard its platform. On the consumer side, it is developing financial services and products that go beyond core e-commerce and increase its captive audience of consumers.

Indonesia’s super app

Despite this new round, CEO and co-founder William Tanuwijaya told TechCrunch that there are no plans to expand beyond Indonesia, which is Southeast Asia’s largest economy and the world’s fourth most populous country with a population of over 260 million.

“We do not have plans to expand beyond Indonesia at this moment. We will double down on the Indonesia market to reach every corner of our beautiful 17,000-island archipelago,” Tanuwijaya said via an emailed response to questions. (Tokopedia declined a request for an interview over the phone.)

William Tanuwijaya, co-founder and chief executive officer of PT Tokopedia, gestures as he speaks during a panel session on the closing day of the World Economic Forum (WEF) in Davos, Switzerland, on Friday, Jan. 26, 2018. World leaders, influential executives, bankers and policy makers attend the 48th annual meeting of the World Economic Forum in Davos from Jan. 23 – 26. Photographer: Jason Alden/Bloomberg

That Indonesia-only approach is in contrast to Go-Jek, the Indonesia-based ride-hailing firm which is rapidly expanding across Southeast Asia. Go-Jek has already moved into Vietnam, Singapore and Thailand with doubtless more plans in 2019.

But Go-Jek and Tokopedia do share similarities in that they have both expanded beyond their central business.

Go-Jek has pushed into on-demand services, payments and more. In recent times, Tokopedia has moved into payments, including mobile top-up, and financial services, and Tanuwijaya hinted that it will continue its strategy to become a ‘super app.’

“We will go deeper and serve Indonesians better – from the moment they wake up in the morning until they fall asleep at night; from the moment a person is born, until she or he grows old. We will invest and build technology infrastructure-as-a-services, in logistics and fulfillment, payments and financial services, to empower businesses both online and offline,” Tanuwijaya added.

Vision Fund controversy

But, with the Vision Fund comes controversy.

A recent CIA report concluded that Saudi Crown Prince Mohammed bin Salman ordered the murder of journalist Jamal Khashoggi. The prince manages Saudi Arabia’s PIF sovereign fund, the gargantuan investment vehicle that anchored the Vision Fund through a $45 billion investment.

SoftBank chairman Masayoshi Son has condemned the killing as an “act against humanity” but, in an analyst presentation, he added that SoftBank has a “responsibility” to Saudi Arabia to deploy the capital and continue the Vision Fund.

“We are deeply concerned by the reported events and alongside SoftBank are monitoring the situation closely until the full facts are known,” Tanuwijaya told us via email, although it remains unclear exactly what Tokopedia could (or would) do even in the worst case scenario.

Given that the Trump administration seems focused on continuing the status quo with Saudi Arabia as a key ally, the situation remains in flux although there’s been plenty of discussion around whether the Saudi link makes the Vision Fund tainted money for founders.

Son himself said recently that he hadn’t heard of any cases of startups refusing an investment from the Vision Fund, but he did admit that there “may be some impact” in the future.

Tanuwijaya didn’t directly address our question on whether he anticipates a backlash from this investment. The Vision Fund’s recent deal with Coupang doesn’t appear to have generated a negative reaction.

Even the involvement of Alibaba throws up other questions, given that it owns Lazada — which is arguably Southeast Asia’s most prominent e-commerce service.

Unlike Tokopedia, Lazada covers six markets in Southeast Asia, it is focused on retail brands and it maintains close links to Alibaba’s Taobao service, giving merchants a channel to reach into the region. According to sources who spoke to TechCrunch earlier this year, Tokopedia’s management was originally keen to take money from Alibaba’s rival Tencent, but an intervention from SoftBank forced it to bring Alibaba on instead.

Tanuwijaya somewhat diplomatically played down the rivalry and any rift, insisting that there is no impact on its business.

“Tokopedia is an independent company with a diversified cap table,” he said via email. “No single shareholder owns the majority of the company. We work closely with our shareholders’ portfolio companies and tap into available synergies.”

“For example, Tokopedia works closely with both Grab — a SoftBank portfolio — and Gojek — a Sequoia portfolio. We see Lazada having a different business model than us: Lazada is a hybrid of retail and marketplace model, whereas Tokopedia is a pure marketplace. Lazada is [a] regional player, we are a national player in Indonesia,” he added.

Tokopedia has many similarities to Alibaba’s hugely successful Taobao marketplace in China

“How can we be less excited about this moment?”

At nearly a decade old, Tokopedia was one of the earliest startups to emerge in Indonesia. Famously, Tanuwijaya and fellow co-founder Leontinus Alpha Edison famously saw nearly a dozen pitches for venture capital rejected by VCs before they struck out and raised money.

Compared to now — and entry to the Vision Fund for “proven champions,” as Son calls it — that’s a huge transition, and that’s not even including the business itself which has broadened into financial products and more. But that doesn’t always sit easily with every founder. Privately, many will often concede that the ‘best’ days are early times during intense scaling and all-hands-to-the-pump moments. Indeed, Traveloka — a fellow Indonesia-based unicorn — recently lost its CTO to burnout.

Is the same likely to happen to Tanuwijaya, Edison and their C-level peers in the business?

Tanuwijaya compared the journey of his business to scaling a mountain.

“Leon and I are very excited entering our tenth year. When we first started Tokopedia, it was like seeing the tip of a mountain that is very far from where we stand. We promised ourselves that we were going to climb to the top of the mountain one day,” he told TechCrunch.

“The top of the mountain is our company mission: to democratize commerce through technology. Today, we have arrived at the base of the mountain. We can finally touch the mountain and we can start to climb it. With this additional capital, we have the tools and supplies to achieve our mission at a faster rate. Should we think whether we are burned-out and go home to rest, or should we climb our mountain? How can we be less excited about this moment?” he added.

Tokopedia has certainly become a mountain in itself. The startup is the third highest valued private tech company, behind only Grab and Go-Jek, at $11 billion and (reportedly) $9 billion, respectively, and the fairytale story is likely to inspire future founders in Indonesia and beyond to take the startup route. What happens to the Vision Fund and its PIF connection by then is less certain.

News Source = techcrunch.com

Washington hit China hard on tech influence this week

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After months of back-and-forth negotiations, Washington moved rapidly this past week to fend off the increasing transcendence of China’s tech industry, with Congress passing expanded national security controls over M&A transactions and the Trump administration heaping more pressure on China with threats of increased tariffs.

We’ve been following the reforms to CFIUS — the Committee on Foreign Investment in the United States — since the proposal was first floated late last year. The committee is charged with protecting America’s economic interests by preventing takeovers of companies by foreign entities where the transaction could have deleterious national security consequences. The committee and its antecedents have slowly gained powers over the past few decades since the Korean War, but this week, it suddenly gained a whole lot more.

Through the Foreign Investment Risk Review Modernization Act of 2018, which was rolled into the must-pass National Defense Authorization Act and passed by Congress this week, CFIUS is gaining a number of new powers, more resources and staff, more oversight, and a charge to massively expand its influence in any M&A process involving foreign entities.

Lawfare has a great summary of the final text of the bill and its ramifications, but I want to highlight a few of the changes that I think are going to have an outsized effect on Silicon Valley and the tech industry more widely.

One of the top priorities of this legislation was to make it more difficult for Chinese venture capital firms to invest in American startups and pilfer intellectual property or acquire confidential user data.

Congress fulfilled that goal in two ways. First, the definition of a “covered transaction” has been massively expanded, with a focus on “critical technology” industries. In the past, there was an expectation that a foreign entity had to essentially buy out a company in order to trigger a CFIUS review. That jurisdiction has now been expanded to include such actions as adding a member to a company’s board of directors, even in cases where an investment is essentially passive.

That means that the typical VC round could now trigger a review in Washington — and in the fast timelines of startup fundraising, that might be enough friction to keep Chinese venture capital out of the American ecosystem. Given that Chinese venture capital (at least by some measures) has outpaced U.S. venture capital in the first half of this year, this provision will have huge ramifications for startups and their valuations.

The second element Congress added was requiring that CFIUS receive all partnership agreements that a company has signed with a foreign investor. Often in a transaction, there is a main agreement spelling out the overall structure of a deal, and then side agreements with individual investors with special terms not shared with the wider syndicate, such as the right to access internal company data or intellectual property. By requiring further disclosure, CFIUS will have a more holistic picture of a deal and any risks it might add for national security.

It’s important to note that Congress was keen on balancing the need for investment with the need of national security. Through oversight provisions, including allowing CFIUS decisions to be contested in the DC Court of Appeals, Congress has designed the reform to be fairer, even as it takes a harder line on certain transactions.

It will take many months for the provisions to come in full force, so some of the effects of this bill won’t be felt until the end of next year. Nonetheless, Congress has sent a clear message of its intent.

Congress’ national security concerns in financial transactions are also crossing the Atlantic. British Prime Minister Theresa May and her government are spearheading new controls over foreign investment transactions, and the EU has also launched more screenings to ensure that transactions are in the best interests of the continent. All of these legislative moves are a response to Chinese foreign direct investment, which has skyrocketed in Europe while almost disappearing in North America.

President Trump signed tariffs on China earlier this year. Now, the administration wants to more than double them.

That disappearance is a function of the on-going trade dispute between the U.S. and China, which crescendoed this past week. The Trump administration said it is considering increasing tariffs from 10% to 25% on $200 billion worth of Chinese goods, significantly heightening the tariffs it had put in place earlier this year.

That threat got a swift response from China overnight, with the Chinese Commerce Ministry saying that it would put tariffs on $60 billion worth of American goods in retaliation if the U.S. followed through with its threat.

So far, the tech industry appears to have been more insulated from the back-and-forth than expected, although the increasing scope and intensity of tariffs could change that calculus. Apple updated its quarterly filing this week to include a new risk around trade disputes, saying that “Tariffs could also make the Company’s products more expensive for customers, which could make the Company’s products less competitive and reduce consumer demand.” Legal boilerplate for sure, but it is the first time the company has included such a provision in its filing.

The tariffs drama is going to continue in the weeks and months ahead. But this week in particularly was a watershed for U.S. and China technology relations, and a busy week for tech lobbyists and policy officials.

For startups, most of this news basically boils down to the following: the U.S. is one market, and China is another. Cross-investing and cross-distribution just aren’t going to be easy as they were even a few months ago. Pick a market — one market — and focus your energies there. Clearly, it’s going to be tough times for anyone caught in the middle between the two.

News Source = techcrunch.com

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