FBI investigation into Hone Capital for potential trade secrets transfer to Beijing

Hone Capital, established in 2015, has been a significant player in Silicon Valley, investing in over 360 startups, including well-known companies like Stripe and Cruise. Concerns have arisen about the origins of the funds used for these investments, with suggestions that some may trace back to the Chinese government. This scrutiny follows broader national security concerns regarding U.S. venture capital investments in Chinese technology firms, as highlighted in a previous report by The Post. Experts have noted the risks associated with the transfer of knowledge and relationships that could benefit adversarial interests, emphasizing the importance of safeguarding trade secrets in the context of U.S.-China relations.

Investigation Details

• Investment Background: Hone Capital’s initial funding came from the China Science & Merchants Investment Management Group, raising flags about the potential influence of Chinese government interests on its operations.

• FBI’s Focus: Investigators are particularly interested in whether Hone Capital has provided any internal information about its portfolio companies, which could have implications for U.S. national security.

Expert Opinions

Venture capitalist Andrew King has warned that beyond financial investments, the transfer of intangible assets such as experience and knowledge poses significant risks. He argues that venture capitalists should prioritize ethical practices and ensure that their investments do not compromise national security by sharing trade secrets or sensitive information.