Founders Fund, Khosla Ventures Visit China as Country’s AI Prowess Rises

U.S. venture capitalists have slashed investments in Chinese startups in recent years as relations between the two superpowers have soured. But behind the scenes, plenty are taking weekslong trips to meet with the country’s tech founders—a sign of the influence Chinese startups like DeepSeek wield in the hottest parts of tech.

Last month, three partners at Peter Thiel’s Founders Fund—Sean Liu, John Luttig and Joey Krug—visited tech companies in Beijing, Shanghai and Shenzhen. It was the second trip to China Liu had made in the past year and Luttig’s first visit to the country, according to people with direct knowledge of the matter. The idea was not to make investments but to learn about China’s thriving tech sector.

Others are taking a similar approach. Khosla Ventures partners have visited tech companies in China two years in a row, according to a person familiar with the visits. Dimension Capital Management, a venture capital firm started by former Lux Capital partners, told its limited partners that the firm spent a week visiting AI labs and entrepreneurs in the country to dig into the competitive edge of China’s startups, as well as the interplay between the country’s AI companies and U.S. ones.

David Cheng, a general partner at Costanoa Ventures, said in a post on X earlier this month that he visited China recently to meet with tech companies. Partners from Thrive Capital also visited last year, according to Bloomberg.

None of those trips has led to investments in Chinese startups, likely due to U.S. government restrictions and the potential controversies such deals can attract. In addition, some investors say it would be too difficult to monitor the progress of Chinese startups from the U.S.

Supply Chain Savvy

But the firms still want to learn more about China. The Founders Fund partners went on the recent trip to get a handle on some of their portfolio companies’ dependence on the supply chain in China and how these businesses stack up against Chinese competitors, said one of the people with direct knowledge of the visit.

The partners visited advanced manufacturing, robotics, self-driving, energy and AI companies, the person said. Their visit included a trip to the Shanghai headquarters of MiniMax, one of China’s AI model upstarts, according to another person with direct knowledge of the visit, as well as UBTech Robotics in Shenzhen, according to a third person with direct knowledge of the visit.

The Khosla partners visited Xiaomi this year and robotics giant Unitree last year. Knowledge of these companies and their hardware suppliers can help investors understand whether a startup in the U.S. is making a product that global competitors are already working on, said the person with knowledge of the visits.

Founders Fund’s trip was notable because the firm’s partners have long expressed antipathy toward China. Earlier this year, Thiel claimed that Pope Leo XIV was “working for the Chinese communists” after the Catholic leader called for AI regulation. Partner Trae Stephens criticized American tech companies who backed away from working with the government, saying the lack of public-private partnership in the U.S. has made China “stronger, richer and more capable.”

And partner Delian Asparouhov last year chastised Benchmark for backing the startup behind viral AI agent Manus. (The Chinese government subsequently forced Manus to reverse the $2 billion sale to Meta Platforms reached late last year.)

Trips like those of Founders Fund speak to the growing sway of China’s AI industry. In the years since OpenAI launched ChatGPT in late 2022, China has gone from an also-ran to a major rival to American frontier labs. That’s largely thanks to the proliferation of startups like DeepSeek and Moonshot AI, which are developing open-source models that cost only a fraction of what AI tokens from OpenAI and Anthropic do, and incumbents like ByteDance, whose Seedance ranks high on leaderboards of the best-performing video-generation modes.

China has also overtaken U.S. startups when it comes to building humanoid robots; Unitree and AgiBot together shipped 71% of humanoids in the world last year, according to Omdia, and the country controls 63% of the key companies in the global supply chain for humanoid robot components, according to German think tank Mercator Institute for China Studies.

China’s supply chain is so essential that employees of some humanoid startups in the U.S. routinely travel to China and fly back home with suitcases stuffed full of prototypes and component samples, The Information reported in August.

Many Chinese founders and entrepreneurs are open to meeting with U.S. investors, even if they back rival U.S. startups, in part because they want to stay informed about what’s going on in Silicon Valley, people familiar with these discussions say.

Growing Restrictions

The Americans’ fact-finding tours are a far cry from the 2000s and 2010s, when U.S. venture capitalists flocked to the country to write checks to startups like TikTok owner ByteDance and ride-hailing provider Didi before they became global powerhouses.

But growing worries that China would overtake America’s role as global tech leader has prompted more restrictions. In 2023, President Joe Biden issued an executive order to regulate U.S. investments in China’s semiconductor, AI and quantum computing sectors. That executive order led to official restrictions on outbound investments in Chinese companies in these fields and took effect in early 2025.

As Washington increased its scrutiny of U.S. deals in China, American VC funds such as Sequoia Capital and GGV Capital, an early Alibaba investor, separated their America and Asia funds in 2023 and 2024, respectively.

So far this year, U.S. VCs participated in 105 deals in China-headquartered companies, nearly flat from 110 deals last year but down 80% from 533 deals in 2021, according to data firm PitchBook.

Some Chinese investors have called on U.S. investors to return to the country. Duane Kuang, founding managing partner of Qiming Venture Partners, an early backer of Xiaomi, noted earlier this year that some of the firm’s U.S. limited partners—the pensions, endowments and family offices that back U.S. VC firms—have been worried they’re missing out on a potential opportunity.