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WASHINGTON – Millions of dollars from U.S. pension funds, including those for New York police officers and firefighters, are being taken away by TikTok’s Chinese-controlled parent company Byte, which is under standing orders from Congress to sell the popular social media platform. There is a high possibility that you are invested in dance. Otherwise you will face a ban.
Future Union, a nonprofit investment watchdog, reported that it had identified 48 pension funds with money in venture capital and private equity firms known to have invested in ByteDance since 2012. new report Post Tuesday obtained.
Six of the largest are directly connected to New York, including the state’s Common Retirement Fund and Teachers’ Retirement System, as well as the New York City Employees’ Retirement System, Police Pension Fund, and Teachers’ Retirement System .
Future Union was unable to accurately track the amount invested directly in ByteDance. That’s because that proprietary data “doesn’t need to be publicly provided by pension funds.”
However, by evaluating the investment firms handling the funds, it confirmed that at least some of the investments went to ByteDance.
“The Future Alliance is [system] Andrew King, the nonprofit’s founder and venture capitalist, told the Post that it is based on the amount of capital committed to ByteDance’s known investors, along with proprietary data on institutional investors. The rankings are reported by combining the ByteDance investment timeline and show the size of the investment. .
The report also found that some of America’s most prominent nonprofits and foundations, including the Mayo Clinic, the Bush Foundation, the Rockefeller Foundation, and the Carnegie Corporation of New York, used investment funds to put money into ByteDance. It was also revealed that
As the largest source of private investment funding in the United States, capital allocators such as pensions, endowments, and foundations account for the majority of funding for venture capitalists and private equity firms.
“Commitments by U.S. public pension funds to venture and private equity funds known as investors in ByteDance amounted to $8.1 billion,” said King, an adviser to the House Select Committee on the Chinese Communist Party. The University Endowment’s previous commitment was $1 billion.”
According to the report, U.S. nonprofits and foundations as a whole are investing in China and China-related venture capital and private equity, including some of the strongest players in the space such as Sequoia Capital, Hillhouse Capital, and Qiming Venture Partners.・The company has made over 620 commitments to equity funds. .
Connection with China
President Biden signed legislation last month forcing ByteDance to exit TikTok. This comes after Republicans and Democrats in Congress raised concerns about social media platforms tracking and reporting the data of American users to the Chinese Communist Party, which heads the United States. adversary.
The report said the Chinese government owns about 1% of TikTok through its state-run Internet Investment Fund, “demonstrating the nearly indecipherable nature of China’s state-owned and private enterprises.”
Under Chinese law, the investment would give the government access to the social media platform’s data collected from users, posing a national security risk to the United States, which led to the passage of the TikTok bill.
“The rise of TikTok has led to dozens of venture capitalist firms taking hundreds of millions, if not billions, of dollars from university endowments and U.S. public pension funds to sell social media platforms forced by Congress. “Thanks to investing in Chinese companies,” King said. .
Experts also believe the Chinese government is using the app (which is not available in China) to favorably influence public opinion in the United States, said a geopolitical consultant and author of World Women’s Affairs. Kelly Currie, the former U.S. ambassador in charge, told the Post.
“ByteDance is not a regular technology company, and TikTok is not a regular social media app. It should be clear to anyone paying attention that TikTok is a hugely successful Chinese influence operation.” she stated. “The Chinese Communist Party has succeeded beyond its wildest imaginations in advancing both its direct policies and indirect influence operations that weaponize polarizing issues.”
danger
Apart from the moral quandary of investing in companies that pose a national security risk to the United States, investment firms are now tying their clients’ funds to companies that may soon be forced to abandon their U.S. operations. , putting customer funds at risk.
“Many of our nation’s most powerful and prominent pension funds, university endowments, nonprofits and foundations have since been implicated in, and may continue to be affected by, geopolitical risk premia in private market investments.” says the report.
According to Future Union, that risk has always been present but has been “ignored for a long time,” but has become unavoidable since the TikTok bill was passed, adding that “the exit opportunity for Chinese companies like ByteDance is “It has decreased significantly.”
“As investors, we are all capitalists here, and our goal is to make money. But we can no longer make investments that directly jeopardize the long-term success of the free market system,” King told the Post. told. “As TikTok shows, the investment choices venture capitalists and private equity investors make today in the most important early-stage technologies will have repercussions for years to come.”
Future Union, which has authored two other reports on U.S. investments in Chinese competitors, said the investment in ByteDance was a financial and financial investment by the U.S. company in exchange for the potential for huge short-term profits from Asian markets. It added that it was part of a worrying trend that jeopardized national security. .
“This means that despite geopolitical tensions, U.S. fund managers are willing to take advantage of technological advances, even if it means ignoring the long-term implications of supporting a hostile ecosystem. “This highlights a general trend of investors continuing to invest in emerging companies that they see as leading in the industry and capable of generating higher returns,” the report said.
Still, Currie said professional investment and venture capital firms knew or should have known about the risks involved, so “even if (U.S. investors in ByteDance) lost money, , no one should feel sorry for him.”
“Every investment involves risk, but this one is riskier than others,” she said. “They are very sophisticated investors… [who] They knew, or should have known, of the risks they were taking by investing in Chinese companies that had serious political, regulatory and operational problems from the beginning. ”
U.S. funding is important, but it’s not the only benefit Chinese companies are reaping.
Because venture capitalists need to make as much money as possible for their clients, “the intangible relationship elements and knowledge that are far more influential and dangerous if transferred to an enemy country like China” King said it also offers
“Venture capitalists are conduits, and when they invest in Chinese startups, their obligation to prioritize profits requires them to support these startups and, by extension, China,” he said. “In doing so, they bring to China the expertise in business best practices and the expertise they have cultivated over their careers working with some of the smartest founders, the richest investors, and the most politically connected and powerful people. They provide China with near-invaluable value: a lifetime of experience and learning, including an established network of people.
“This is a much more invisible threat than just capital.”
