More than 20 venture capital firms have taken a significant step towards ensuring the integrity of their investments by signing the Clean Capital Certification, a pledge to reject funding from foreign adversaries such as China, Russia, Iran, and Cuba. This move aims to prevent these countries from profiting from US success and potentially gaining access to sensitive technologies.

The certification, created by advocacy organization Future Union, is a response to growing concerns about foreign interference in the private sector. By signing the pledge, venture firms commit to not taking money from countries deemed a threat to US national security and economic prosperity. Marlinspike Partners, Humba Ventures, and Snowpoint Ventures are among the firms that have already signed the certification.

Craig Cummings, partner at Moonshots Capital, emphasized the importance of this commitment, stating that "we must ensure that US adversaries do not directly profit from our success, and publicly signing the Clean Capital Certification is a way to commit to that duty as a community."

The issue of foreign interference in venture capital is not new, with concerns dating back several years. Andrew King, executive director of Future Union, has been working on the pledge for about three years, driven by his fears of Chinese interference in the US. He recalled having conversations with a friend at the Department of Defense about the Chinese operation in the US, which he believed was influencing venture capital and private equity through money and other incentives to gain access to critical technologies.

King warned that if a firm has Chinese investors, it's possible that those investors, and subsequently the Chinese government, could receive proprietary information about portfolio companies. While this fear is largely hypothetical in the venture capital world, it's a concern shared by an increasing number of people.

Recent incidents have highlighted the risks of foreign interference. In September, the FBI investigated California-based venture capital firm Hone Capital for allegedly passing information to its Chinese investors. A congressional committee report in February also called out five US investment firms for investing in Chinese companies, claiming these investments supported China's military and enabled human rights abuses.

Congressman John Moolenaar, chairman of the Select Committee on the CCP, applauded the Clean Capital Certification, stating that "American national security and economic prosperity are put at risk when US companies invest in our foremost adversary or welcome CCP-backed investors on their boards."

It's notable that many of the firms signing the pledge invest in defense tech startups. For these companies, taking money tied to certain countries can jeopardize their ability to do business with the Department of Defense. While bigger funds that invest in defense, such as Andreessen Horowitz and Founders Fund, are absent from the list, they have clarified their stance on not taking capital from countries covered by the pledge.

Despite the voluntary nature of the certification, which lacks a formal vetting process, King believes it's a crucial first step. He hopes that even just a public pledge will hold firms accountable, as reputational risk and damage could result from attesting to the certification and then being found to have taken money from foreign adversaries.

Future initiatives may include a third-party organization to vet firm investors or another certification that examines limited partners. As the venture capital industry continues to grapple with the risks of foreign interference, the Clean Capital Certification marks an important step towards ensuring the integrity of investments and protecting US national security and economic prosperity.