According to the FT, the FBI is now poking around nine-year-old Hone Capital, a Palo Alto, Ca.-based venture firm funded by a Chinese private equity firm, to determine whether some of its capital came from the Chinese government — and if it shared sensitive startup data with Beijing.
Originally launched with $115 million from China’s CSC Group, Hone has since snapped up stakes in more than 360 U.S. startups, including the investing platform AngelList, payments giant Stripe, and supersonic flight outfit Boom.
The probe comes amid continuing U.S.-China tensions that have seen U.S. firms back out of the country and prompted both venture funding and startup creation in China to nosedive.
The FT notes that Hone has also been feuding with two former executives since 2020. The firm sued the two – its former CFO and its former Silicon Valley head – alleging fraud. They countersued, saying they’re being denied their fair share of the firm’s profits. Hone and CSC deny any wrongdoing.