AI Paranoia Meets China Paranoia Head-On

Lon Harris
Lon Harris is a contributor to dot.LA. His work has also appeared on ScreenJunkies, RottenTomatoes and Inside Streaming.
AI Paranoia Meets China Paranoia Head-On
Evan Xie

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According to a new report from The Information, a number of American investors have indirectly financed Chinese AI startups, some of which have set the goal of becoming China’s answer to OpenAI. The piece by journalist Juro Osawa lists Chinese VC firms Sequoia Capital China, Matrix Partners China, Qiming Venture Partners, and Hillhouse Capital Management among the companies putting serious funds into local AI startups.


The investments have gone to a variety of Chinese companies. Sequoia China recently put funds into a new venture from noted Beijing AI researcher and scholar Yang Zhilin, a veteran of Google’s AI labs and Meta Platforms. The focus of his new venture remains unknown. Matrix and Qiming, meanwhile, put funds into the Beijing-backed startup Frontis, which has its own variation on a ChatGPT-type product. That company is now valued in the hundreds of millions of US dollars. Hillhouse has backed MiniMax, another Chinese startup with a ChatGPT-style chatbot in the works. That company has raised more than $100 million to date at a valuation above $1 billion, ranking it among China’s first AI unicorns.

As a lot of American AI projects – including OpenAI’s ChatGPT – remain unavailable to Chinese consumers, it’s still a wide-open market for this new generation of apps. Still, Chinese AI projects must work around the country’s strict media and censorship laws. Compared to an American venture, a Chinese take on something like ChatGPT is limited both in terms of the content on which it can be trained and the results it’s permitted to return. (In other words, internet content that’s censored in China won’t be fed into the chatbot to begin with, and it’s barred from making statements or outputs that violate Chinese laws.)

A ChatGPT rival from Chinese search giant Baidu, called Enhanced Representation through Knowledge Integration or “Ernie” for short, fizzled upon its launch in mid-March. A presentation that was marketed as live but had actually been pre-recorded was deemed a flop by the New York Times and helped cement the idea internationally that China will be unable to respond to the success of ChatGPT, at least in the short-term, due to its strict internet censorship rules. Another Chinese chatbot, ChatYuan, has been suspended by authorities after challenging the Chinese Communist Party’s official stance on Russia’s war in Ukraine.

Chinese tech companies taking investments from Americans in US dollars is certainly nothing new. Nonetheless, the mounting fears about out-of-control rapidly progressing AI apps have already reached a relatively fevered pitch in the US. Sci-fi-influenced fears about intelligent machines running amock colliding with socio-political paranoia about the rise of China as a global superpower could create a perfect storm of panic. With American politicians already mulling over a TikTok ban, it’s easy to see how Americans funding Chinese AI research could soon develop into a controversy of its own.

The potential controversy goes beyond national security concerns as well. There’s also potential for US companies and individuals to fund Chinese apps that are used by the government in ethically or legally questionable ways. MiniMax founder Yan Junjie, for example, previously worked for another Chinese AI startup called SenseTime. In 2021, the US Treasury Dept. added SenseTime to its ongoing list of Chinese firms in which Americans are not allowed to invest, alleging that the company’s facial recognition software had been used by the Chinese government to oppress the country’s Uyghur Muslim minority.

Pushback against the idea of US investment in Chinese AI started as soon as The Information piece dropped. Entrepreneur Keith Rabois tweeted plainly that these deals “[need] to be illegal” while noted software engineer Grady Booch referred to the investments as a result of “rapacious capitalism, untethered from any ethical foundation.” Sequoia partner Shaun Maguire, for his part, tweeted that the article was misleading, as it refers to Sequoia China, not the company’s US arm. A number of commenters argued that this was splitting hairs, as the two firms and their LPs share vital resources and information between them, and American investors put money into companies through Sequoia China. Sequoia China raised a record $8.5 billion in 2022, much of it from American institutional investors.

Regardless of the specific nature of the separation between its international divisions, Sequoia must have seen this potential controversy coming. Sequoia China is led by one of the country’s best-known venture capitalists, Neil Shen, who’s also a board member in TikTok owner ByteDance and has long-standing ties to the ruling Communist Party. Back in February, The Wall Street Journal reported that Sequoia Capital was consulting US national security experts about Sequoia China’s investments, hoping to avoid potential future restrictions by the Biden administration. These concerns reflect not only AI investments but other collaborations on high-level tech projects, such as the manufacture of advanced superconductors. - Lon Harris

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⚖️FTC’s "Click to Cancel" Rule and Its Ripple Effect on Tech

🔦 Spotlight

Happy Friday Los Angeles,

The FTC’s new “Click to Cancel” rule is shaking up subscription-based tech. Now, instead of navigating a maze of cancellation hurdles, users can cancel subscriptions as easily as they signed up—with a single click. This shift is a wake-up call for SaaS, streaming, and app-based companies, where once-hidden exit options often kept users around simply because canceling was a hassle.

The rule also requires businesses to send regular renewal reminders, ensuring customers stay informed about upcoming charges. It's more than a cancellation button—it’s about transparency and giving users control over their decisions.

For startups, the impact goes deeper than UX adjustments. Many have relied on "dark patterns," which subtly discourage cancellations by hiding the exit. Now, companies must shift toward building genuine loyalty by delivering real value, not by complicating exits.

While this might affect retention rates initially, it could lead to more sustainable business models that rely on satisfaction-driven loyalty. Investors may start prioritizing companies that emphasize transparent, long-term engagement over those that depend on dark patterns to maintain retention metrics.

The rule opens the door to more ethical UX design and a truly user-centered approach across the tech industry. It may even set a precedent against manipulative design in other areas, such as privacy settings or payment methods.

Ultimately, the “Click to Cancel” rule presents an opportunity for the tech industry to foster trust and build stronger customer relationships. Startups and established companies that embrace transparency will likely stand out as leaders in a new era of customer-centric tech, where trust—not tricky design—is what retains users.

As the tech landscape continues to evolve, LA Tech Week 2024 offers a chance to explore these shifts in real-time. Check out the upcoming event lineups to stay informed and make the most of your time:

For updates or more event information, visit the official Tech Week calendar.


🤝 Venture Deals

LA Companies

  • Ghost, a company supporting top brands and retailers with streamlined logistics and fulfillment solutions, raised a $40M Series C funding round led by L Catterton to fuel its continued growth and innovation. - learn more

LA Venture Funds
  • Assembly Ventures participated in a $27M Series A round for Monogoto, a provider of software-defined connectivity solutions that enable secure, cloud-based IoT and cellular network management on a global scale. - learn more
  • Angeleno Group participated in a $32M Series C round for REsurety, a company that recently launched an innovative clean energy marketplace aimed at providing better financial and operational insights to support renewable energy transactions. - learn more

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    🌴🧑‍💻 Your Guide to LA Tech Week 2024

    🔦 Spotlight

    Happy Friday Los Angeles,

    As many of you know, LA Tech Week is right around the corner, kicking off next Monday October 14th bringing together founders, creatives, investors, and engineers for a week of immersive events, panels, and socials across the city. From blockchain and AI to biotech and design, LA Tech Week is a chance to dive into the ideas shaping today’s technology landscape.


    What to Look Forward To

    Insights from Visionary Leaders: Hear firsthand from industry trailblazers as they share stories, challenges, and key lessons from their experiences. Expect fresh perspectives on AI, venture capital, biotech, and the ethical questions around emerging technologies.

    Interactive Panels: This week isn’t about watching from the sidelines; it’s about engaging directly with the tech community. Participate in hands-on panels discussing everything from startup scaling to ethical AI, with honest insights from those actively shaping these fields.

    Networking Mixers & Social Events: Meet and connect with founders, VCs, developers, designers, and fellow techies across LA. Rooftop mixers, lunch meetups, and creative gatherings offer the perfect chance to spark ideas and collaborate.

    Plan your week with the daily lineup, organized by location for easy navigation:

    For updates or more event information, visit the official Tech Week calendar.

    Enjoy LA Tech Week 2024!!


    🤝 Venture Deals

    LA Companies

    • Clout Kitchen, a Los Angeles and Manila based startup, has raised $4.45M in seed funding, co-led by a16z SPEEDRUN and Peak XV’s Surge, to develop AI-powered digital twins, which enables gaming creators to produce realistic virtual avatars for content and fan engagement. - learn more
    • MeWe, a privacy-focused social media platform, has raised an initial $6M in Series B funding led by McCourt Global to support Web3 integration and expand its decentralized network for 20 millions users. - learn more

      LA Venture Funds
      • EGB Capital participated in a $10M Series A funding round for MiLaboratories, which develops software that enables biologists to independently analyze complex genomic data, accelerating research and discovery in fields like drug development. - learn more
      • Crosscut Ventures participated in the $13.75M seed round for Airloom Energy, a company focused on developing airborne wind energy technology to harness high-altitude winds, with plans to accelerate a pilot project in Wyoming. - learn more
      • Overture VC participated in a $5.5M Seed funding round for Molg Inc., a company developing robotics and software for circular manufacturing, designed to disassemble electronics efficiently and recover valuable materials to reduce e-waste and support sustainable production. - learn more


        LA Exits

        • Options MD, a Los Angeles based telemedicine platform that provides care for people suffering from severe and treatment-resistant mental illness, is set to be acquired by Resilience Lab, an AI-driven provider focused on enhancing mental health care access. - learn more

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        LA Tech Week 2024: Saturday-Sunday Event Lineup
        tech-week

        Here’s what’s happening during the closing weekend (Oct 19 - Oct 20) of LA Tech Week 2024! Events are organized by location so you can easily catch the sessions that interest you most.

        SATURDAY EVENTS

        BEVERLY HILLS

        12:00 PM

        • BIG Showcase (Invite Only):

        BIG Showcase (Invite Only)

        2:00 PM

        Light Dao

        Struck Capital, Seahorse Express

        EAGLE ROCK

        12:00 PM

        Sunrise Integration, Shopify

        EL SEGUNDO

        9:00 PM

        Administratum, Valar Atomics

        HOLLYWOOD

        10:00 AM

        Passes

        MALIBU

        6:00 PM

        • Malibu Beachfront Investors Networking & Wine Tasting:See Details

        Gaya Ventures

        MARINA DEL RAY

        6:00 PM

        • Awaken Your Spirit: A Journey of Transformation (Invite Only)

        Sagos Distro, Alma Wellness

        SANTA MONICA

        7:00 AM

        Founders Running Club

        8:30 AM

        Techstars

        9:00 AM

        Magic Mind

        StartupStarter, Inc., City of Santa Monica

        10:00 AM

        Gen She

        AI LA

        Crea, Barry's, Unsubscribe

        10:30 AM

        Plantologist

        11:30 AM

        • Pickleball Palooza (Invite Only)

        YouTube

        1:00 PM

        • Realfren Games: From strangers to an inner Realfren within 52 weekends: See Details

        Office for Humanity and Circuit Works

        • Talking blockchain technology with special guests: See Details

        LadyDayDao

        5:00 PM

        KARD, What's Plots

        THE VALLEY

        7:00 AM

        Camino5

        VENICE

        9:00 AM

        Westside Yogis

        11:00 AM

        Open App

        1:00 PM

        Ripe and Teddy's Hot House

        4:00 PM

        • Fashion Forward: How AI is Redefining the Fashion Industry: See Details

        VIAVIA, BNTO.RENT, ALMA.AI

        VIRTUAL

        11:00 AM

        BLCK UNICRN

        WEST HOLLYWOOD

        7:00 PM

        Next Sequence

        SUNDAY EVENTS

        INGLEWOOD

        12:00 PM

        Entrepreneur Ventures, VCPE GROUPS

        PLAYA DEL RAY

        2:00 PM

        AI LA, DELL, NVIDIA

        SANTA MONICA

        10:00 AM

        • Women Founders, Cold Brew & Beach View, Rooftop: See Details

        Clutch Talent

        11:00 AM

        11DollarSunglasses.com, Less Litter Foundation

        12:00 PM

        Data in LA, Amplitude

        12:30 AM

        New Moon, Warner UK Innovations

        TOPANGA CANYON

        3:00 PM

        Dreamore

        VENICE

        8:00 AM

        • Surf session with founders, investors, creators: See Details

        Surfed Club, Bow Shock

        12:00 PM

        • Podcast Panel and Brunch: LA Tech Community Builders: See Details

        WeAreLATech.com, Blankspaces.com

        VIRTUAL

        2:00 PM

        BLCK UNICRN


        For updates or more event information, visit the official Tech Week calendar.

        Enjoy LA Tech Week 2024!


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