The US government launched a tip line for VCs and startups to blow the whistle on China. Why isn't Silicon Valley snitching?

Phone call

Summary List Placement

For an informant calling in with a hot tip about a potential national security threat, the generic voicemail greeting provides little sense of urgency or adventure.

Without introduction, a man’s voice announces, “The Office of Investment Security and Committee for Foreign Investment in the United States” … followed immediately by the ubiquitous pre-recorded greeting of, “is not available. Record your message after the tone.”

You wouldn’t know it from calling the Washington, D.C. phone number, but the greeting is one of the newest weapons in the federal government’s escalating battle with China for tech supremacy. The phone number serves as a “tip line” set up by the the government in the summer of 2020 to gather on-the-ground intelligence about potentially dangerous foreign involvement in American businesses.

The businesses most in the crosshairs these days are tech firms developing the advanced algorithms and infrastructure that undergird modern society. And the threat the government is most concerned about comes from China, whose influence within US tech businesses remains a chief concern of federal officials.

In setting up its tip line, the Committee on Foreign Investment in the United States (CFIUS) seems to be betting that venture capital partners, startup founders and computer programmers can be turned into a loose-knit network of informers, dutifully calling in to drop a dime on suspicious deals involving their peers and competitors.

So far, the tech industry’s citizen spies do not appear to have gotten the message.

In Silicon Valley, the front lines of the US-China tech trade war, awareness of the CFIUS tip line is negligible at best. In interviews with more than two dozen VCs, tech execs and other industry insiders, the most common reaction to the topic of the tip line was obliviousness.

Of the few VCs who were aware of the tip line, most said they were told about it from either the Department of Defense’s Defense Innovation Unit or the government-backed In-Q-Tel investment firm. None were aware of anyone who had actually called the tip line.

“I honestly didn’t even know that it was set up,” said one long-time venture capitalist who, like many industry insiders contacted for this story, was unwilling to speak on the record about CFIUS enforcement.

Treasury department spokeswoman Alexandra LaManna declined to answer basic questions about the tipline, including how often it has been used, what, if anything, the committee has done to promote it to companies and potential whistleblowers, and how many staff the agency has to process information that comes in. “We are not commenting on this story,” she said.

The tip line’s muted reception in Silicon Valley reflects a broader challenge facing the US as it tries to fortify the firewall between American enterprises and the Chinese state in a deeply interconnected, global tech economy. Many of the biggest US tech companies, like Apple and Tesla, have significant parts of their supply chains in China; popular internet apps like TikTok, meanwhile, have parent companies headquartered in China, while hot new services like Clubhouse rely on Chinese companies for parts of their back-end infrastructure. And startups, hungry for the financing to scale their operations, generally enjoy easy access to money from all over the world.

Against that backdrop, the question for many of the potential tipsters in Silicon Valley that CFIUS hopes to tap is what, exactly, are they supposed to be blowing the whistle on?

Why VCs aren’t snitching

Until recently, the government committee behind the tip line — CFIUS — was not a recognizable name to anyone other than policy wonks and corporate lawyers who joke that the acronym is often mistaken for a rare disease. The multi-agency committee, which includes staff from the departments of Treasury, State, and Defense, among other agencies, is tasked with reviewing foreign investments and mergers that could pose a national security risk to certain technologies deemed “critical,” or, more broadly, to companies that maintain sensitive data.

The Trump administration’s attempt in 2020 to force Chinese company ByteDance to divest the US operations of TikTok put CFIUS in the spotlight. While the effort to force a sale of TikTok — on the grounds that the data of American citizens was at risk — ultimately failed, CFIUS was already playing a much more active role behind the scenes. 


A 2020 Congressional Research report found that of the more than 1,100 investment transaction notices filed with CFIUS between 2009 – 2017, roughly half led to an in-depth review by the committee. The report noted that CFIUS’s expanded purview under a 2018 law stems from concerns that “investments by Chinese firms are receiving government support through subsidized financing or other types of government support that give Chinese firms an ‘unfair’ competitive advantage over other private investors.”

The increased scrutiny has had a chilling effect on startups pursuing or accepting investments with ties to China, many venture capitalists and M&A attorneys say. But if techies are thinking twice about doing deals with Chinese firms and investors, they don’t appear to be burning up the phones lines to snitch on their peers.

Trae Stephens, a partner at Founders Fund and co-founder of Anduril Industries, which sells AI technology to the federal government, said he hadn’t heard of anyone using the CFIUS tip line. When asked why some Silicon Valley VCs had expressed reservations about calling in, Stephens said he was “continually shocked” by what he sees as a “lack of willingness to critique foreign nations or make moral judgement” among tech firms.

The Committee on Foreign Investment has done little to get the word out about its special hotline.

The phone number, and a corresponding email address (, are tucked away on the Treasury Department’s policy FAQ page. There, visitors are invited “to report a tip about a potential foreign investment that may implicate national security, or to report a possible breach of a CFIUS mitigation agreement.”

A disclaimer at the bottom of the page reminds would-be tipsters that sending information to the committee “does not guarantee a further response, and CFIUS assumes no obligation to take action on the basis of the information provided.”

Former Treasury employees who spoke to Insider characterized the tip line as a valuable tool of the committee’s growing enforcement arm, but said that it hadn’t become a focal point.

One former Treasury official told Insider that in the years before a formal tip line was established this summer, CFIUS typically received a few reach-outs every week to its general phone number or email address. For the most part, he said, the messages were “absolute nonsense” — such as people “ranting against the government” or complaining about taxes and the IRS — rather than in-the-know industry insiders with actionable information.

“See something, say something”

The lack of promotion of the CFIUS tip line is in sharp contrast to a similar tip line operated by the Commerce Department’s Bureau of Industry and Security. The bureau’s tip line has been operational for more than 30 years and is frequently publicized to attendees at specialized industry conferences by badge-wearing enforcement agents.

The small Commerce bureau, which enforces export laws governing sensitive technologies such as encryption software and certain semiconductors used by the military, relies on the hotline for tips about illegal sales and shipments to buyers blacklisted by the federal government. Last year alone, the bureau opened 58 investigations and received more than 117 leads from its tip lines, a spokeswoman said. The bureau’s most recent annual report, meanwhile, notes nearly 1,400 total “outreach contacts,” a metric used to measure engagement between agents and company employees.

Even before the Commerce bureau made its tip line a prominent part of its website, it offered an 800-number for anonymous voicemail messages.

“In the 90’s, once [a tipster] made contact, they’d be set up with the nearest field office” to provide additional information, said former top bureau official Thomas Andrukonis, who spent 41 years at the agency before leaving last month to join the global advisory firm, FTI consulting.

Andrukonis said the bureau’s tip line was an “extremely useful tool to continue what enforcement deems a partnership with industry,” and described the promotion of it as a “‘See something, say something’ kind of message.”

But while the types of activities policed by the Commerce bureau are fairly straightforward, CFIUS’s mission and jurisdiction are not so obvious. And not everyone is convinced that an anonymous tip line makes sense as a tool for CFIUS.

U.S. President Joe Biden speaks about his racial equity agenda at the White House in Washington, U.S., January 26, 2021. REUTERS/Kevin Lamarque/File Photo

Since the statute the committee operates under doesn’t define “national security” or what constitutes “sensitive personal data,” enforcement is subject to the wide latitude of the Presidential administration to set priorities, something attorneys say was demonstrated perhaps more than any prior president by Donald Trump, who adopted a frequently unpredictable and combative trade policy during his time in the White House.

China is expected to remain the top priority for CFIUS in the Biden administration, according to former Treasury staff, attorneys and policy experts who spoke with Insider. But the types of cross-border deals and transactions the administration will view as permissible, versus those that set off alarm bells, remains an open question.

That leaves any aspiring VC-spies in Silicon Valley, for the moment at least, with their mission on hold

“Anything new like that takes time,” said Benjamin Powell of the law firm Wilmer Hale, regarding the uptake of the CFIUS tip line. And besides, he adds, the bulk of the committee’s work stems from information brought from companies directly, rather than whistleblowers. “They’re not chasing after things that are necessarily in the shadows.”

Additional reporting by Berber Jin and Candy Cheng. 

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