tech2 News StaffAug 08, 2016 09:34:14 IST
An increasing amount of Chinese capital flowing into silicon valley is changing the landscape drastically, according to a report in the Washington Post. Silicon Valley startups are hungry to get investment from this new source, but that leads to a whole host of problems. Chinese investors are also transitioning from a production based economy to a innovation based one, and for their part find it viable to invest in Silicon Valley Startups.
The dangers this poses includes a change in the growth trajectories of the startups. There is a cultural clash and suspicion on both sides. Silicon Valley startups are weary of strong arm techniques used by Chinese firms after investments. Chinese Investers want to be respected, and treated as smart investors and not a source of dumb money. There is a danger of poaching ideas, technology and technological products. Chinese investors are known to invest in competing startups in the same space.
An example is Alibaba's investment in Quixey, an application that is a search engine that searches within Apps. Quixey managed to bag a $110 dollar deal from Alibaba, which was to be paid out over two rounds. However, Alibaba stopped paying , and Quixey found itself in trouble. Senior management resigned, and then Alibaba forced agreement to new terms with the startup, where Quixey was given a loan, and not allowed to sue Alibaba.
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