US-based investors are not moving forward with investments in Chinese technology companies amid tensions between the two nations, according to long-time local investor and venture capitalist Patrick Zhong.
“Everybody kind of put it on hold because of geopolitical concerns,” said Zhong, the founding general partner of M31 Capital, in an interview with Bloomberg Television. “Many of the LPs in America and many of the company CEOs in America haven’t traveled to China. They used to travel to China once a quarter. But they haven’t been back since Covid.”
Zhong was himself visiting the US for the first time since before the pandemic to speak at the SALT iConnections New York conference this week.
Prior to founding M31 Capital, which invests in next generation companies with strong ties to China, Zhong worked in venture capital, private equity and public markets. He spent seven years at Fosun Group as a global investor and before that at Wellington Management, where he invested in China’s crop of technology giants including Alibaba Group Holdings Ltd., Tencent Holdings Ltd. and Baidu Inc.
Zhong, in outlining what he sees as a depression in US interest in China’s tech names, cited the fraction of flights daily between the US and China in the first quarter of the year relative to pre-pandemic levels. Bloomberg reported last week there are a maximum of just two dozen flights weekly between the nations, down from an average of 340 per week in 2019.
China’s efforts to regulate its technology industries are less of a concern for Zhong, given that venture capital firms have longer time horizons to realize returns. In the field of artificial intelligence, the hottest topic of 2023, Zhong says he’s “optimistic” that entrepreneurs across nations will work together but recognises China has a lot of talent in AI.
By Ed Ludlow and Sonali Basak / Bloomberg