A promising U.S. healthcare startup battles for survival against its Chinese investor

Scott Nelson says he is running out of time.

- Amrith Ramkumar

Scott Nelson, co-founder and CEO of FastWave Medical.

If he can’t raise more money by the end of the year, the medical-devices executive says he may have to shutter his startup, FastWave Medical, and the technology he has been working on for nearly five years.Nelson's problem is that a Chinese company is his biggest investor and is blocking every fundraising move he tries to make, he alleges. It seems like an elaborate scheme to destroy the business and gain control of its technology, FastWave claimed in a letter to Cfius, the Committee on Foreign Investment in the U.S., which reviews investments from overseas entities with a focus on national security.

“They’re essentially suffocating us,” Nelson said, adding that the Chinese company Grand Pharmaceutical had initially seemed to be a promising partner. He has sought help from a lobbyist with ties to the Trump administration, members of Congress and a former head of Cfius. Grand Pharmaceutical didn’t respond to requests for comment.

National-security hawks say FastWave's case highlights dangerous gaps in U.S. export and investment policy. Past government reports have estimated Chinese intellectual property theft costs the U.S. economy hundreds of billions of dollars annually.

The issue is in focus after President Trump suspended a crackdown on Chinese companies seen as security threats as part of a recent trade truce. Lax security and diligence practices by companies create an opportunity for China to continue stealing U.S. inventions tied to key areas such as artificial intelligence and healthcare, experts said. Grand Pharmaceutical has joined with a Chinese competitor working on similar devices, concerning some lawmakers who worry the technology will be commercialized there.