CFIUS Cometh: What this Obscure Company Does and Why It Matters to Your Fund or Startup


How the government plans to fight international investment in tech firms and endeavor capital

CFIUS Cometh: What this Obscure Company Does and Why It Matters to Your Fund or Startup

Evan J. Zimmerman
Contributor

Evan J. Zimmerman is an entrepreneur, investor, and writer. He’s the Chairman of Jovono and Chairman of the Clinton Health Glean entry to Initiative expertise council. He’s a companion and director in Mighty Mug/Mighty Merchandise, Inc, and chairman of Brush Up Club, an innovative oral well being company.

On January 12, 2016, Grindr announced it had sold a 60% controlling stake within the company to Beijing Kunlun Tech, a Chinese gaming company, valuing the company at $155 million. Champagne bottles had been completely popped on the minute-ish company.

Even though no longer at a unicorn-level valuation, the 9-figure exit changed into as soon as tranquil respectable and signaled a understanding future for the elated hookup app. Indeed, two years later, Kunlun sold the the leisure of the company at more than double the valuation and changed into as soon as planning a public offering for Grindr.

On March 27, 2019, it all fell apart. Kunlun changed into as soon as putting Grindr up for sale as an replace.

What went snide? It wasn’t that Grindr’senterprise ground to a pause. By all accounts, its enterprise looks to in actuality be rising. The danger changed into as soon as that Kunlun proudly owning Grindr changed into as soon as viewed as a possibility to nationwide security. This potential that, CFIUS, or the Committee for International Investment in america, stepped in to dam the transaction.

So what changed? CFIUS changed into as soon as expanded by FIRRMA, or the International Likelihood Review Modernization Act, in late 2018, which gave it extensive contemporary vitality and scale. Unlike sooner than, FIRRMA gave CFIUS a expertise level of curiosity. So now CFIUS isn’t factual an American danger—it’s an American tech danger. And within the impending years, this can transform endeavor capital, Chinese involvement in US tech, and in all likelihood even startups as we perceive it.

Here’s a closer survey at how it all fits collectively.

  • What is CFIUS
  • What is FIRRMA?
    • A form of targets
    • Nationwide security now has a expertise level of curiosity
    • CFIUS has a bunch of up-to-the-minute powers and a more substantial evaluate task
  • Who Does This Have an be aware on?
    • Venture Capital
    • Startups
    • China
  • Wrap-up

What is CFIUS?

CFIUS Cometh: What this Obscure Company Does and Why It Matters to Your Fund or Startup

Image by Getty Photographs / Busà Images

CFIUS is a in point of fact powerful company you’ve by no methodology heard of, and till no longer too prolonged ago it wasn’t even more than a committee. In essence, CFIUS has the capacity to pause international entities, known as “covered entities,” from buying firms when it would per chance well maybe adversely have an impression on nationwide security—a “covered transaction.”

As soon as a filing is made, CFIUS investigates the transaction and both events, that would bewitch over a month in its first trek. From there, the company and CFIUS enter a negotiation to survey within the event that they’ll resolve any components.

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