Feature: ONE investor linked to China’s oppression of ethnic Muslims

Karim Zidan and John S. Nash delve into Sequoia Capital, a primary backer for ONE Championship that also invests in surveillance technology that China uses to surveil its Muslim minorities.

Over the past few years, ONE Championship has grown from an upstart MMA promotion in Singapore to a become one of the most recognizable sports properties in Asia. Since hosting its debut event in 2011, the promotion has held over 100 events in more than 10 countries across the Asian continent. The promotion even launched ONE Studios, a TV and film production division that will feature programmes and film with starring ONE athletes.

While ONE Championship was able to achieve this growth through outside investment fundraising — a strategy that helped it reach an alleged $1 billion valuation — one of those investors has recently been linked to the Chinese government’s oppression of its Muslim minority.

Sequoia Capital, an American venture capital firm that participated in ONE Championship’s series C and D investment fundraising, is also an investor in Yitu, a Chinese Artificial Intelligence (AI) company that creates facial recognition algorithms that are now being incorporated by the Chinese government.

This article will attempt to explain how ONE Championship — an MMA promotion that claims to be “Asia’s largest global sports media property in history” — grew with significant funding from a venture capital firm that also invests in Chinese AI technology used to surveil China’s ethnic Muslims.

Sequoia Capital

Founded in 1972, Sequoia Capital has grown to become perhaps the premiere global venture capital firm, having backed startups that now command a staggering $1.4 trillion of combined stock market value, equivalent to 22% of Nasdaq. It invested in Steve Jobs early in his career, and oversaw Apple’s initial public offering in 1980. Their list of success stories since then includes Oracle, Cisco, Yahoo, Google, LinkedIn, Airbnb, Dropbox, FireEye, Palo Alto Networks, Stripe, Square and WhatsApp.

Based in the San Francisco Bay Area they have focused mainly on the technology industry, a market that has seen the greatest number of unicorns (a privately held startup with a valuation of $1 billion or more). This has helped put nine Sequoia partners on Forbes’ annual Midas List ranking of top venture investors.

Starting with Israel in 1999, the firm has expanded its operations to other tech rich markets. More recently, they have set their sights on Asia, which has come into focus as the future of the global economy. The affiliated firm, Sequoia Capital China, was established in 2005, and in 2006 Westbridge Capital Partners, an Indian venture capital firm, was acquired and renamed Sequoia Capital India.

Sequoia Capital India would team with Mission Holdings (the investment vehicle for Sirabh Mittal, a former classmate at Harvard of ONE Championship’s Chatri Sityodtong) to lead the Series C funding of ONE Championship in 2017. This would push the total capital investment in the MMA promotion to over S$100 million. This would be followed by a series D investment last year that was led by the parent firm, the US Sequoia capital. This raised an additional S$166 million in funding.

Sequoia’s investment into ONE Championship is more than a little surprising, considering the venture capital firm’s usual focus is on technology startups. Equally surprising is how the notoriously selective firm made their decision to back the martial arts company less than ten weeks after they received the presentation.

It is unknown what exactly Sequoia sees in ONE Championship, but the very fact that they have chosen to invest in them can only be taken as sign of confidence in their potential. At the same time, even with their stellar track record, Sequoia has not been infallible with their picks. In the past they have suffered big losses betting on such failed efforts as eToys, Webvan, and the app Color. Amongst the $395 million that was raised for their incredibly successful 2003 Venture XI fund ($3.6 billion in gains, or 41% a year, over the next 11 years) $100 million of it was lost on startups.

Since entering the World Trade Organization, the economy of China has exploded. With so much money now to be made in the Asian giant that is notoriously difficult for outsiders to navigate, Sequoia has chosen to open their own Chinese firm. Sequoia China is headed by Neil Shen, who reached the top of Forbes Midas List in 2018 and is widely identified as China’s most successful venture capitalist. He now oversees a new $8 billion global growth fund, that will be targeting the soon-to-be largest economy in the world.

“We never want to miss a trend,” Mr Shen was quoted saying by the Financial TImes, highlighting the aggressive stance the venture firm would take when looking for new startups.

“For Sequoia, what matters is to be first and to be the most important investor. You have to lead each round,” he said. “And today you can’t lead with $10m or even $100m sometimes.”

“Why should I let other investors have the upside in companies I have invested in when there is still so much appreciation?” he added. “Today, you need bigger amounts to stay in the game. We worry that we have been too conservative.”

China’s Brutal Crackdown on Muslims

In August 2018, reports emerged that China had detained more than a million ethnic Uighurs in Xinjiang in a crackdown aimed at combating religious extremism. The United Nation human rights panel expressed alarm over the reports, which included credible claims that the Chinese government was forcing the Uighurs, as well as other Muslim minority groups such as Uzbeks or Kazakhs, to undergo psychological re-education and indoctrination programs while being held in camps and detention centres. They have also reportedly been subjected to torture in various forms.

The Uighurs are Turkic-speaking Muslims from the Central Asian region. Approximately 10 million Uighurs live in Xinjiang, a region in China’s northwest that was annexed by the People’s Republic of China in 1949. The Uighurs speak an Asian Turkic language similar to Uzbek and practice Sunni Islam. When first annexed, the Uighurs made up around 76% of the Xinjiang’s population, while Han Chinese — the country’s majority ethnic group — made up around 6% of the region. Following Han migration encouraged by the Chinese government, the Uighurs now equate to only 42% of the region’s population.

Since being annexed, the Uighurs and other minorities within Xinjiang have undergone repeated crackdowns from the Chinese government, which created civil and ethnic unrest in the region. Protests against Chinese rule emerged in the 1990s and occurred periodically for the next few decades. China attempted to deal with the unrest through repression and forced assimilation. This led to inflamed ethnic tension which brought about extremist actions such as the Kunming stabbing attack that killed 31 people. China blamed the attack on separatists from Xinjiang and used such examples as justification for turning Xinjiang into a surveillance state.

The Chinese government also has an economic incentive for increasing its stranglehold over Xinjiang. The region is a logistics hub for the Belt and Road Initiative, a trillion-dollar development strategy adopted by China that involves infrastructure development meant to increase China’s economic influence in Europe, Asia, and Africa. Since Xinjiang lies on China’s northwest border, it is a pathway to Central and Western Asia, which makes it an essential logistics port for China.

China’s renewed crackdown on the Uighurs and other ethnic Muslim groups is the government’s latest attempt to peel away their rights and religious freedoms. The Chinese government first denied the existence of detention camps when confronted by the United Nation in August but have since reframed them as legal re-education camps designed to eradicate extremism.

Despite the Chinese government’s attempt to spin the narrative, French news service Agence France-Presse (AFP) reported that the guards at the camps were carrying spiked clubs, stun guns, and tear gas. The government reportedly purchased 2,768 police batons, 550 electric cattle prods, 1,367 pairs of handcuffs, and 2,792 cans of pepper spray, according to publicly available documents that the AFP journalists reviewed.

Beyond the harrowing detention camps, the Chinese government is using sophisticated facial recognition software and artificial intelligence to track down and profile Uighurs. According to The New York Times, the technology is used exclusively to surveil Uighurs based on their appearance to review their movements. The demand for such technology is growing across China, as it appears that police are now using it to target Uighurs in other provinces throughout the country. This so-called “minority identification” is the first reported example of a government using artificial intelligence to surveil its people for law enforcement.

According to the Times, the Chinese AI start-up companies responsible for the facial recognition software that is catering to authoritarian needs include CloudWalk, SenseTime, Megvii, and Yitu, the latter of which shares an investor with ONE Championship.

Yitu is one of the most advanced facial recognition companies in the industry. Their flagship products are the Yitu Dragonfly Eye, a computer software designed for public surveillance, and the Dragonfly Eye Generic Portrait Platform, which is used for dynamic facial recognition. The software can use real-time surveillance and face retrieval based on its dataset of 1.8 billion individuals. One report revealed that Yitu’s software is being used by more than 20 public security departments in China.

While ONE Championship is not directly involved in China’s surveillance of ethnic Muslims, it owes a portion of its growth to a venture capital firm that invests in the surveillance technology used by the Chinese government. Since ONE boasts about its alleged $1 billion valuation and its status as a promoter of Asian sports and culture, it should proceed with caution when assessing the source of its funding.

ONE Championship and Yitu have not responded to a request for comment.