The backlash came swiftly for Benchmark, one of Silicon Valley’s top venture capital firms, after Bloomberg News reported in late April that it was investing in an AI startup founded in China. Republican senators framed the deal as Benchmark effectively aiding the Chinese government, and suggested Congress should take action. Fellow venture capitalists said Benchmark was acting irresponsibly. “You’re just investing into your enemy,” says Delian Asparouhov, a 31-year-old partner at Founders Fund. “Why would we be funding the Russia space program in 1972? Why would we be funding the Chinese AI race in 2025? To me, those are the same questions. It just seems to be beyond the realm of logic.”
Benchmark declined to comment. But the grumbling came as a surprise to Bill Gurley, a longtime partner at the firm who scaled back his responsibilities in 2020 and wasn’t involved directly in the deal. In a May episode of BG2, his podcast, Gurley supported the firm’s decision to lead a $75 million investment in Butterfly Effect, the creator of the AI agent Manus. The product, he noted, only operates atop large language models developed in the US, such as Anthropic’s Claude; and the startup has offices outside China and doesn’t store any customer data there. He rejected the notion that it posed a threat to US national security. “In not being a China hawk, people accuse you of being a sinophile. And there’s a lot of room in between those things,” said the 6-foot-9-inch Gurley, one of the most recognizable figures in the venture industry.