What to Know about CFIUS

Dec 23, 2019

Michael Leiter, a partner at Skadden Arps specializing in CFIUS and national security, dives into the complexities of foreign investment regulations. He highlights the recent CFIUS reforms and how they affect tech founders seeking foreign partnerships. The transition from voluntary to mandatory filings is thoroughly examined, including risks of non-compliance. Leiter discusses the impact of regulations on fintech and crypto, emphasizing data security. He also shares insights on navigating export controls and strategic planning for startups to ensure compliance amidst evolving policies.

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INSIGHT

CFIUS Overview

CFIUS reviews foreign investments in US businesses for national security concerns.
Its scope has expanded beyond traditional defense industries to encompass data and technology.

ANECDOTE

CFIUS Historical Focus

CFIUS was initially concerned with the semiconductor industry shifting from the US to Japan.
Post-9/11, the focus shifted to critical infrastructure, exemplified by the Dubai Ports World deal.

INSIGHT

Data and CFIUS

CFIUS reforms now consider personally identifiable information (PII) as a key factor.
Fintech and data companies handling PII fall under greater scrutiny.

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When innovation and capital go global, so do restrictions on trade, foreign investment, and more. Over the past couple years, U.S. policymakers have expanded the scope of the Committee on Foreign Investment in the U.S. (CFIUS) through the Foreign Investment Risk Review Modernization Act (FIRRMA) of 2018 which was recently updated through proposed reforms this September 2019.

So what does this all mean for tech founders taking investments from, or doing joint ventures with, foreign entities -- or just doing business globally in general? What does and doesn't CFIUS cover, and how might one structure partnerships strategically as a result? In this episode, a16z general partner Katie Haun interviews Michael Leiter (of law firm Skadden Arps) who specializes in CFIUS as well as matters involving U.S. national security and cybersecurity, cross-border transactions, aerospace and defense mergers and acquisitions, and government relations and investigations.

The Q&A took place in September 2019 as part of an event hosted by Andreessen Horowitz.

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