It’s already a tough time to go public in the U.S., with most companies opting against it at the moment. But it will be especially difficult for Shein. While the retailer may have drawn the favor of investors due to its enormous revenue figures, Shein has made plenty of enemies within Washington, D.C., largely due to press reports about problematic labor practices within its supply chain. It’s a clear example of how contentious U.S. and China business relations have become.

Shein has been under investigation this year by a new House Committee that was set up earlier this year to protect both U.S. military interests and prevent human labor abuses. The Committee, which is chaired by Republican Wisconsin Representative Mike Gallagher, investigated Shein and other retailers this summer over potential use of forced labor within its supply chain in Xinjiang, China, and published an interim report that accused Shein of evading U.S. tariffs. 

“Shein’s public claims that they take ‘visibility across our entire supply chain seriously’ is not supported by the materials produced to the committee in its bipartisan investigation,” Chairman Gallagher told Fortune in an emailed statement regarding Shein’s potential IPO. “We are continuing to carefully examine Shein’s regulatory and compliance programs, and I would encourage investors and banks underwriting this reported IPO to do the same.”

It’s not just the Committee that has been critical of the startup. In August, attorneys general from 16 states sent a letter to SEC, urging Chair Gary Gensler not to allow Shein to go public unless it can guarantee the company is adhering to U.S. law. Earlier this year, in June, Senator Marco Rubio sent out a letter to other members of the Senate accusing the company of using slave labor in its supply chain, citing a Bloomberg investigation from last year.

A Shein spokeswoman declined to comment on the IPO, but said that the company takes “visibility across our entire supply chain seriously, and we are committed to respecting human rights.” The company said that, as of Nov. 2023, only 1.7% of its cotton tested positive for unapproved cotton, and that it takes “immediate action such as suspending production, halting shipments to the United States and removing U.S. product listings” when cotton from unapproved regions is detected. “We are eager to engage and continue to be transparent will all stakeholders… in discussions that will help us continue to add value to the U.S. economy, support our American workers, and bring industry-wide benefits to consumers,” the spokeswoman said.

Shein has made efforts to distance itself from forced labor allegations, including sending a group of influencers on an all-expense paid trip to its factories in an effort to debunk some of the claims (that turned into a whole scandal). The company has also tried to distance itself from China itself, moving its headquarters to Singapore in 2019. 

But mounting pressure from U.S. officials may cause public investors to question whether they believe them. Combine that with today’s IPO market, and Shein may be in for a bumpy ride.

See you tomorrow,

Jessica Mathews
Twitter: @jessicakmathews
Email: jessica.mathews@fortune.com
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Update, Nov. 29, 2023: The online version of this newsletter has been updated with a comment from Shein.

Joe Abrams curated the deals section of today’s newsletter.

VENTURE DEALS

- ZeroAvia, a Hollister, Calif.-based company developing zero-emission plane engines, raised $116 million in Series C funding. Airbus, Barclays Sustainable Impact Climate, and NEOM Investment Fund led the round and were joined by Breakthrough Energy Ventures, Horizons Ventures, and others.

- Aro Biotherapeutics, a Philadelphia, Penn.-based developer of tissue-targeted genetic medicines, raised $41.5 million in Series B funding. Cowen Healthcare Investments led the round and was joined by existing investors Johnson & Johnson Innovation, Northpond Ventures, and others.

- Pika, a Palo Alto, Calif.-based platform that uses AI to generate and edit videos, raised $35 million in Series A funding. Lightspeed Venture Partners led the round and was joined by angel investors. 

- PhysicsX, a London, U.K.-based developer of AI technology designed to automate engineering processes, accelerate accurate physics simulations, and more, raised $32 million in Series A funding. General Catalyst led the round and was joined by Standard Investments, NGP, and others. 

- Lassie, a Stockholm, Sweden-based pet insurance provider, raised €23 million ($25.3 million) in Series B funding. Balderton Capital led the round and was joined by existing investors Felix Capital, Inventure, Passion Capital, and Philian. 

- Cradle, a Delft, The Netherlands and Zurich, Switzerland-based AI platform designed to help scientists design and engineer proteins, raised $24 million in Series A funding. Index Ventures led the round and was joined by Kindred Capital and angel investors. 

- PayGround, a Gilbert, Ariz.-based app for managing and paying medical bills, raised $19.7 million in Series A funding. SixThirty led the round and was joined by Rally Ventures, IA Capital, FCA Venture Partners, and Plug and Play Ventures.

- Cloudsmith, a Belfast, Ireland-based software supply chain management platform, raised $11 million in a Series A extension. MMC Ventures led the round and was joined by others.

- Expanso, a Seattle, Wash.-based platform designed for fast and secure data computation for enterprises, raised $7.5 million in seed funding. General Catalyst and Hetz Ventures led the round and were joined by Array Ventures.

- CoordinateHQ, a Redwood City, Calif.-based project management and collaboration platform, raised $5.5 million in seed funding. Initialized led the round and was joined by Webb Investment Network and angel investors. 

- Construex, a Quito, Ecuador-based digital marketplace for the construction and architecture sectors, raised $4.6 million in seed funding. Zacua Ventures and Fifth Wall led the round and were joined by others. 

- Monterra, a San Francisco-based developer of software designed to automate the design and planning of EV charging installations, raised $2.5 million in pre-seed funding. Base10 Partners led the round and were joined by Future Climate Venture Studio, Very Serious Ventures, and angel investors.

- Inflow, a Ho Chi Minh City, Vietnam-based supply chain and manufacturing platform for fashion brands, raised $2 million in seed funding from AppWorks, 500 Global, January Capital, and others. 

PRIVATE EQUITY

- Fort Point Capital acquired a majority stake in Visu-Sewer, a Pewaukee, Wis.-based provider of critical wastewater infrastructure rehabilitation and maintenance services. Financial terms were not disclosed. 

FUNDS + FUNDS OF FUNDS

- Tower Arch Capital, a Salt Lake City, Utah-based private equity firm, raised $750 million for its third fund focused on founder and family-owned businesses in the lower middle market. 

- New Heritage Capital, a Boston, Mass.-based private equity firm, raised $438 million for its fourth fund focused on founder-owned businesses in the middle market. 

- Oxx, a London, U.K. and Stockholm, Sweden-based venture capital firm, raised $190 million for its second fund focused on European business-to-business software-as-a-service companies. 

- NXTP, a Buenos Aires, Argentina-based venture capital firm, raised $98 million for its third fund focused on technology companies in Latin America.

PEOPLE

- Adams Street Partners, a Chicago, Ill.-based private equity firm, hired Michael Kurlander as a partner. Formerly, he was with Pagaya Technologies. 

Correction, No. 29, 2023: The online version of this newsletter has been corrected to reflect that Construex is based in Ecuador, not El Salvador.