NYPD, FDNY, NYC teachers and employee pension funds may have sunk millions into TikTok parent ByteDance

WASHINGTON Millions of dollars from US pension funds, including those of New York police officers and firefighters, are likely to be invested in ByteDance, the Chinese-controlled parent company of TikTok that is under a permanent order from Congress to sell the platform known social media or face it. the ban.

Nonprofit investment watchdog group Future Union has identified 48 pension funds that have entrusted their money to venture capital and private equity firms that are known to have invested in ByteDance since 2012, according to a new report obtained by The Post Tuesday.

Six of the largest are directly related to New York, including the state’s common pension fund and teachers’ retirement system, as well as the New York City Employees’ Retirement System, the police pension fund, and teachers’ pension system.

The TikTok logo appears on a mobile phone in front of a computer screen, October. 14, 2022. AP

Future Union was unable to track exactly how much money was directly invested in ByteDance because its proprietary data “is not required to be publicly provided by pension funds.”

However, she confirmed that at least some of the investment went to ByteDance by evaluating the investment firms that handled their money.

“The union of the future invented a [system] based on the amount of capital committed to known investors in ByteDance, combining proprietary data on institutional investors with ByteDance’s investment timeline to report rankings and show the size of capital commitments,” the nonprofit founder and venture capitalist Andrew King .

The New York Police Pension Fund is among the top US pension funds believed to have invested in ByteDance. Christopher Sadowski

The report also revealed that some of the most prominent US nonprofits and foundations have used investment funds that put their money into ByteDance, including the Mayo Clinic, the Bush Foundation, the Rockefeller Foundation and the Carnegie Corporation of New York.

As America’s largest source of private investment dollars, endowments, pensions, foundations and foundations account for the majority of source funding for venture capitalists and private equity firms.

“Commitments from US public pension funds to venture and private equity funds that are known investors in ByteDance totaled $8.1 billion, while past US university endowment commitments were $1 billion,” explained King, of which advises the House Select Committee on the Chinese Communist Party.

US nonprofits and foundations overall have made more than 620 commitments to Chinese venture capital and China and private equity funds, including some of the most powerful players in the field such as Sequoia Capital, Hillhouse Capital and Qiming Venture Partners, according to the report. . .

Relations with China

President Biden last month signed a bill that would force ByteDance to divest from TikTok after Republicans and Democrats in Congress raised concerns about the social media platform’s tracking and reporting of US user data to the Chinese Communist Party. the main adversary of the USA. .

According to the report, Beijing, through its state-run Internet Investment Fund, owns about 1% of TikTok’s shares, “illustrating the almost indecipherable nature of state-owned and private-sector companies in China.”

Under Chinese law, the investment gives the government access to data the social media platform collects from its users, creating a national security risk for the US that led to the passage of the TikTok legislation.

An image shows TikTok’s office after the US House of Representatives overwhelmingly approved a bill that would have given TikTok’s Chinese owner ByteDance about six months to divest the short video app’s US assets or face a ban, in Culver City, California, March. 13, 2024. Reuters

“TikTok’s rise owes itself to dozens of venture capitalists investing hundreds of millions, if not billions of dollars, from university endowments and US public pension funds into the Chinese company that Congress has forced to sell the social media platform,” King said. .

Experts also believe Beijing is using the app, which is not available in China, to sway U.S. opinion in its favor, the geopolitical consultant and former U.S. ambassador for Global Women’s Affairs told The Post. Kelly Currie.

“ByteDance is not a normal tech company and TikTok is not a normal social media app. It should be clear to anyone paying attention that TikTok is an extremely successful Chinese influence operation,” she said. “It has succeeded beyond the CCP’s wildest imagination in advancing the CCP’s direct agendas— as well as indirect influence operations that weaponize polarized issues.”

DANGER

In addition to the moral quandary of investing in a company that poses national security risks to the US, investment firms have now risked their clients’ funds by tying them to a company that may soon be forced to divest its operations in USA.

“Many of our most powerful and prominent pension funds, university endowments and non-profit organizations/foundations have subsequently been incorporated and may now remain subject to a geopolitical risk premium in private market investments,” the report said.

The California State Teachers Retirement System is among the main pension funds linked to investments in ByteDance. California Teachers Association

This risk has always existed but has been “ignored for too long,” according to Future Union, but is now unavoidable since the passage of the TikTok legislation, “resulting in greatly reduced exit opportunities for Chinese companies like ByteDance.” .

As investors, everyone was a capitalist here and the goal is to make money. However, we can no longer make investments that directly harm the long-term success of our free market system,” King told The Post. “As TikTok shows, the investment choices that venture capitalists and private equity investors are making today, in the earliest stage and most critical technologies, have consequences that reverberate for years.”

Future Union, which has produced two other reports on US investments in Chinese competitors, added that ByteDance’s investments are part of a worrying trend of US firms risking financial and national security in exchange for the possibility of big short-term returns from the Asian market. . .

“This highlights a general trend that, despite geopolitical tensions, US fund managers continue to invest in startups they see as leaders in technology advancement and capable of generating higher returns even if this means ignoring the long-term implications of supporting an adversarial ecosystem. the report says.

The New York State Teachers Retirement System has been linked to investments in ByteDance. Google Maps

However, Currie said that “no one should feel sorry for (US investors in ByteDance) at all if they lose money,” as professional investment firms and VCs either were or should have been aware of the risks involved.

“Every investment carries risk, and this one more than most,” she said. “These are very sophisticated investors… [who] knew or should have known the risks they were taking by investing in a Chinese company that has been marked by major political, regulatory and operational problems since day one.”

While US funding is important, it is not the only benefit received by Chinese companies.

Because venture capitalists are required to make as much money as possible for their clients, they also provide “intangible relationship elements and knowledge that are much more influential and more dangerous if transferred to an adversary like China,” King said.

“Venture capitalists are a conduit, and if they invest in Chinese startups, their duty to prioritize returns requires them to help these startups, and thus China,” he said. “In doing so, they offer China the almost priceless value of a lifetime’s worth of experience and lessons from … expertise in best business practices and networks developed over a career that touches the brightest founders, investors the richest and the most politically connected middlemen.

“This is an invisible threat worse than mere capital.”

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Image Source : nypost.com

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