Oct 18, 2019

Venture capital industry wants more clarity on foreign investment rules

Illustration: Aida Amer/Axios

The National Venture Capital Association (NVCA) submitted a long list of comments on Thursday to CFIUS — the Committee on Foreign Investment in the United States, an interagency group housed within Treasury — regarding a year-old law that added more stringent rules for foreign investments in U.S. firms.

What's happening: The Foreign Investment Risk Review Modernization Act — or FIRRMA — is meant to protect strategic American tech like artificial intelligence.

  • The NVCA's letter addressed 11 areas of the law that the lobby thinks need more clarity or tweaking, lest it become unnecessarily difficult for VCs to operate (particularly in cases that weren't intended to fall under the law).
  • These areas include things like: determining whether a VC firm is based in the U.S. (tricky if it has overseas offices!), determining who is a "foreign person" (so many have partners working in said overseas offices!), defining "material nonpublic information" so that it doesn’t include basic reporting to a company board, and limiting CFIUS' reach to truly U.S.-based companies.

What they're saying: "NVCA has been at the table during FIRRMA's consideration because it stands to have a significant impact on the venture and startup ecosystem," Bobby Franklin, head of the NVCA, wrote on TechCrunch at the time of the law's passage.

  • "Few in the startup world have dealt with CFIUS, but those who have understand its power and implications. It's the opaque government entity that blew up the Broadcom-Qualcomm transaction for national security reasons and has been called the 'ultimate regulatory bazooka.'"

Between the lines: The comments made also it clear that the lack of clarity could lead to companies and investors submitting more deals for review out of caution, and that can lead to a big problem: too much work, not enough resources, and ultimately a really slow process. No startup trying to run as fast as possible wants that.

  • Read the full letter here.

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Minnesota activates National Guard amid fallout from George Floyd death

A portrait of George Floyd hangs on a street light pole in Minneapolis. Photo: Stephen Maturen/Getty Images

George Floyd, 46, moved to Minnesota to improve his life and become his "best self," but instead, he is dead because of Minneapolis police.

The latest: Minnesota Gov. Tim Walz declared a state of emergency and activated the state's National Guard in response to violent clashes over the past two days between police and protesters in the Twin Cities.

Trump signs executive order targeting protections for social media platforms

President Trump signed an executive order on Thursday designed to limit the legal protections that shield social media companies from liability for the content users post on their platforms.

What they're saying: "Currently, social media giants like Twitter receive an unprecedented liability shield based on the theory that they are a neutral platform, which they are not," Trump said in the Oval Office. "We are fed up with it. It is unfair, and it's been very unfair."