May 24, 2019

"New Cold War" fears hit Silicon Valley

Illustration: Aïda Amer/Axios

A prominent Silicon Valley investor tells Axios that U.S.-China trade tensions are "the new Cold War."

Driving the news: In this Cold War, tech has evolved from a negotiating point (IP theft, forced transfer) into a cudgel (Huawei, rare earths, etc.). Trade tensions are also having a negative impact on startups, particularly in "hard tech" areas like AI, advanced manufacturing, IoT, machine learning, and networking.

Several venture capitalists tell Axios:

  • Chinese investment in American "hard tech" companies has all but dried up, and portfolio company CEOs are being told not to count on it changing when planning future fundraising.
  • Chinese companies are no longer viewed as viable acquirers due to concerns that the deals could be blocked by CFIUS.
  • Impacts are beginning to be felt on both supply chains, and cross-border VCs are having a tougher time creating mutually-beneficial partnerships between U.S. and Chinese portfolio companies.

What's new: For the first time, these venture capitalists are worried about accepting Chinese investors as limited partners. Not because such passive investments are currently illegal, or really even scrutinized, but because there's a belief that could flip in a hurry. If so, it would reduce the amount of future available capital and create massive complexities for existing investments.

The bottom line: The U.S.-China trade war seems to be spiraling out of control, with even the pretense of progress being dropped by both sides. And, if it continues, tech startups and investors in both countries will need to contend with guardrails that were inconceivable just one year ago.

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Coronavirus dashboard

Illustration: Sarah Grillo/Axios

  1. Global: Total confirmed cases as of 5 p.m. ET: 652,079 — Total deaths: 30,438 — Total recoveries: 137,319.
  2. U.S.: Leads the world in cases. Total confirmed cases as of 4 p.m. ET: 116,505 — Total deaths: 1,925 — Total recoveries: 921.
  3. Federal government latest: President Trump is considering a quarantine on New York, parts of New Jersey and Connecticut. He signed a $2 trillion stimulus bill to give businesses and U.S. workers financial relief.
  4. State updates: Alaska is latest state to issue a stay-at-home order — New York is trying to nearly triple its hospital capacity in less than a month and has moved its presidential primary to June 23. Some Midwestern swing voters that supported Trump's handling of the virus less than two weeks ago are now balking at his call for the U.S. to be "opened up" by Easter.
  5. World updates: In Spain, over 1,400 people were confirmed dead between Thursday to Saturday.
  6. 🚀 Space updates: OneWeb filed for bankruptcy amid the novel coronavirus pandemic.
  7. Hollywood: Tom Hanks and Rita Wilson have returned to U.S. after being treated for coronavirus.
  8. What should I do? Answers about the virus from Axios expertsWhat to know about social distancingQ&A: Minimizing your coronavirus risk
  9. Other resources: CDC on how to avoid the virus, what to do if you get it.

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Infant dies after testing positive for coronavirus in Chicago

Hospital staff working inside a COVID-19 screening tent in Chicago on March 26. Photo: Jim Vondruska/NurPhoto via Getty Images

An infant less than one year old died in Chicago, Illinois after testing positive for the novel coronavirus, the state health department said on Saturday.

Why it matters: The death would mark the first reported infant mortality from COVID-19 in the U.S. The fatality rate for the novel coronavirus in the U.S. is highest among those over 85 years old, per the CDC.

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Trump weighs quarantine of New York, New Jersey, Connecticut

Data: The Center for Systems Science and Engineering at Johns Hopkins; Map: Andrew Witherspoon/Axios

President Trump said on Saturday he is considering a "short term" quarantine of New York, New Jersey and parts of Connecticut — states that have already taken steps to quarantine residents and promote social distancing.

The big picture: With 112,000 people infected, the U.S. has the most COVID-19 cases in the world, exceeding China and Italy, per data from Johns Hopkins. A second wave of American cities, including Boston, Detroit, New Orleans and Philadelphia, are reporting influxes of cases.

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