US start-ups are receiving billions of investments from China's tech giants.

In 2011, Joe Chen, CEO of Renren, met Mike Cagney, CEO of SoFi, in Palo Alto and decided to invest in the fast-growth, disruptive online finance start-up. This initial $4 million investment helped SoFi get its start and led to two more financings within three years, with Renren contributing a major chunk of some $230 million raised.

Last month, Silver Lake made a $500 million investment in SoFi.

SoFi is the kind of deal that Chen has been pursuing: His NYSE-listed company, once known as the of China, has been investing in fast-growth tech start-ups to broaden its revenues and boost its stock price. That connection with Renren has also boosted SoFi.

Dan Macklin, a co-founder of SoFi in San Francisco, stated that Joe was a visionary investor who saw the potential in the company from the beginning and encouraged them to grow at a faster pace and become more aggressive.

Chinese tech giants, including Renren and , are spearheading a wave of Chinese investment in innovative U.S. technology start-ups with ambitious plans to expand their presence, attract top talent, and gain a competitive edge in innovation.

The BAT, China's dominant technology companies, are expanding globally by diversifying their brands in the US. They are seeking to acquire or invest in fast-growing tech companies in various sectors, including virtual reality, fintech, social media, video games, and mobile apps. Their deals include popular American brands such as Snapchat, Lyft, and Magic Leap.

Over the past two years, the four largest Chinese internet companies, including the BAT and e-commerce giant JD.com, have invested a total of $5.6 billion in 48 U.S. tech deals. Of these deals, more than three-quarters took place in California, with Silicon Valley being a particularly popular destination for these companies.

The purchase of the Waldorf-Astoria hotel in New York City by Anbang Insurance, a Chinese insurance company, for $1.95 billion is just one example of how Chinese investment in the U.S. economy has surged.

In 2016, Chinese investors invested a record $45.6 billion in US companies, which was triple the amount invested in 2015, according to Rhodium Group in New York City. The increase in investment has been driven by the slowing of the Chinese economy and the appreciation of the US dollar against the Chinese yen, as explained by Rhodium economist Thilo Hanemann.

According to Orville Schell, director of U.S.-China relations for the Asia Society, the Chinese government is investing billions of dollars to reduce the technological gap between the United States and China.

Despite Chinese authorities tightening restrictions on capital outflows and controlling "irrational" outbound investment by Chinese firms, a $1 billion purchase by Dalian Wanda Group of Dick Clark Productions in Los Angeles is at risk of being delayed. Additionally, U.S. alarms about potential security and economic risks over Chinese takeovers of American companies have been heightened during the recent presidential election.

Partnering with Chinese investors and acquirers can be advantageous for U.S. tech start-ups looking to expand into the competitive Chinese market. By securing funding from China's leading tech companies, U.S. businesses can gain a foothold in China, establish an immediate presence, and receive valuable insights on how to tailor their products for the local market.

An unexpected beneficiary of Trump's immigration ban is Canadian start-ups. An anti-Buffett investing bet that's suddenly busting out is more from Global Investing Hot Spots.

American tech start-ups can receive favorable terms from Chinese corporate investors, who pay more to invest in American start-ups compared to Sand Hill Road venture capitalists. This is because Chinese buyers are essentially paying a tuition to gain insights into the U.S. market, as explained by Jay Eum, co-founder and managing director of TransLink Capital in Silicon Valley.

Alibaba, the visionary Jack Ma's e-commerce leader in China, has been actively investing in U.S. start-ups in recent years. In recent years, Alibaba has led financing rounds totaling $2.1 billion in various U.S. start-ups, including virtual reality start-up Magic Leap, social media company Snap, mobile messaging app Tango, ride-sharing app Lyft, remote-control app Peel, mobile gaming start-up Kabam, app search engine Quixey, and subscription service ShopRunner.

Baidu invested $30 million in TrustGo and $10 million in Indoor Atlas, while Tencent invested $400 million in Riot Games and $400 million in Epic Games, and co-invested with Alibaba in Lyft. Renren invested in a series of U.S. fintech start-ups, including leading a $31 million lead investment in Fundrise in 2014 and a $40 million investment in Motif in 2015.

Baidu, Alibaba, and Tencent have established offices in California for research and development and corporate venture investing, taking a long-term perspective on their China tech deal making. This approach is a stark contrast to the pattern of Japanese deal makers during the 1990s in the United States, who invested heavily in trophy properties such as Pebble Beach and Rockefeller Center, only to suffer major losses.

The Chinese investors in U.S. tech companies are not passive, but active. Tango, a Silicon Valley-based messaging app, has a monthly meeting with a board member at Alibaba to review strategies and strategic impact. Tango CEO and co-founder Eric Setton frequently visits Alibaba headquarters in Hangzhou and has set up a Beijing office. Setton got his initial introduction to Alibaba from Jerry Yang, a founder of Yahoo, which has been strongly linked through ownership ties with the Chinese conglomerate for several years.

Peel, another Silicon Valley start-up, has experienced a tight interaction with its Chinese investors, including Alibaba. Co-founder Thiru Arunachalam stated that he gains access to talent in China through the Alibaba connection and leverage in the fast-growing Chinese market.

Eum of Translink, a venture investor, expressed his admiration for Alibaba as a strategic investor after three of his portfolio companies received investments from the Chinese e-commerce giant. He highlighted the synergistic relationship and informative exchange between the two sides as significant advantages.

— By Rebecca Fannin, special to bizfocushub.com