The globalization of east Asian venture capital: the effects of its ‘return diffusion’ on Silicon Valley

Abstract The global financial system's investment in high-technology start-ups is exemplified by Silicon Valley venture capital (VC). While Silicon Valley remains a leading hub of VC activity worldwide, its norms and practices have evolved since its origins in the Second World War, especially with the internationalization of VC in the twenty-first century. This article offers a novel explanation for these changes by analysing east Asian governments' policy for internationalizing VC activity, Silicon Valley VC co-investment data and media coverage of key Silicon Valley VC managers. We argue that ‘return diffusion’ from east Asia—defined as the practice of models flowing back to their original source —has played a role in shaping the evolution of Silicon Valley VC. The collaboration and coexistence of Chinese, Japanese, South Korean and Taiwanese actors in Silicon Valley have contributed to the growing prominence of corporate investors, increased valuations and fund sizes, and heightened national security concerns among core Silicon Valley VC managers. Our findings contribute to the special section's exploration of how east Asia's growing influence in global financial markets is shaping, rather than merely following, the international economic order—even in the quintessentially liberal Silicon Valley VC market.