The American investors, including US endowments, back key Chinese VC firms such as Sequoia Capital China, Matrix Partners China, Qiming Venture Partners and Hillhouse Capital Management that are striking local AI startup deals, which have yet to be previously reported.

The irony is that US government officials really hate it when the Chinese invest in their own country’s companies. For instance, Sequoia China, the Chinese affiliate of the Silicon Valley VC stalwart, recently made a U.S.-dollar investment in a brand-new AI venture created by Yang Zhilin, a young assistant professor at Beijing's prestigious Tsinghua University. For those not in the know, Tsinghua is China's equivalent of the Massachusetts Institute of Technology.

Yang, who got his doctorate from the School of Computer Science, Carnegie Mellon University, in 2019, is considered one of China's top AI researchers. He previously co-founded another startup Sequoia China backed, Recurrent AI, which develops tools for salespeople, according to the company's website.

Matrix and Qiming, meanwhile, recently funded another Beijing-based AI startup, Frontis, which has compared its product to ChatGPT. According to the company's website, it was founded in 2021 by Zhou Bowen, a Tsinghua professor who once led JD.com's AI research lab. The company said the deal gave the startup a paper valuation of hundreds of millions of US dollars.