Mr Palihapitiya, a part-owner of San Francisco's basketball team, made the comments during a podcast discussion of whether President Joe Biden's action on the issue had helped him politically.
The remarks drew social media backlash.
Mr Palihapitiya later admitted that his comments "lacked empathy".
In a statement intended to clarify his stance, he said "important issues deserve important discussions".
"I believe that human rights matter, whether in China, the United States, or elsewhere," he wrote on Twitter.
Many people following the issue were not satisfied.
"When people apologise, they deserve a second chance. I don't view this as an apology when Chamath can not even acknowledge how his comment was hurtful to the Uyghur community," human rights lawyer Rayhan Asat wrote on Twitter. "China takes comfort knowing that corporate executives have their back and will continue this genocide."
The US has accused China of genocide in its repression of the predominantly Muslim Uyghur minority in the Xinjiang region - a charge that China has repeatedly rejected.
Last year, Mr Biden signed into law new rules that require companies to prove that goods imported from the area were not made with "forced labour".
Mr Palihapitiya, an early executive at Facebook and now a prominent venture capitalist, is co-host of the "All-in" podcast on which he made the remarks. He was responding to his co-host's observation that Mr Biden's stance on the issue had not helped him in the polls.
"Let's be honest, nobody, nobody cares about what's happening to the Uyghurs, okay? You bring it up because you really care. And I think that's really nice that you care but .... The rest of us don't care. I'm just telling you a very hard truth," he said.
Boston Celtics Forward Enes Kanter, who has been outspoken about human rights issues and campaigned on behalf of the forced labour law, was among those condemning the comments.
"When genocides happen, it is people like this that let it happen," he wrote.
In a statement, the Golden State Warriors basketball team distanced itself from Mr Palihapitiya, who owns 10% of the team, calling him a "limited investor with no day-to-day operating functions".
"Mr Palihapitiya does not speak on behalf of our franchise and his views certainly don't reflect those of our organization", the team said.