Good morning, Term Sheet readers.
Founders Fund, the venture capital firm co-founded by Peter Thiel, has produced outsize returns for its investors, according to a new report in the Wall Street Journal.
On paper, every dollar that Founders Fund invested from its 2011-vintage fourth fund has more than quadrupled to $4.60, as of the third quarter last year. Meanwhile, the industry average for funds of that vintage was $2.11 during the same period.
The WSJ notes that Founders Funds’ earliest funds, from 2005 and 2007, now have grown sixfold and more than eightfold, respectively. The funds include companies such as Facebook, Palantir, and SpaceX.
The article goes on to explain that Thiel faced criticism in Silicon Valley after donating to the Trump presidential campaign and speaking at the Republican National Convention in 2016. Although there was speculation that Thiel’s personal views could discourage entrepreneurs from doing business with Founders Fund, there is no sign deal flow slowing. Founders Fund reportedly recorded 67 investments in 2018 compared with 46 in the previous year.
In June, I spoke with Founders Fund partner Trae Stephens and asked him about this exact thing. Here’s what he had to say:
TERM SHEET: Peter Thiel has been outspoken on Trump and other political matters. He recently said that he’ll relocate to Los Angeles because “tech culture has become increasingly intolerant of conservative political views.” Founders Fund is based in Silicon Valley. What are your thoughts on the political polarization in tech? Is it really that bad?
STEPHENS: One of the things that I like most about Founders Fund is that we have created an environment where someone like Peter can have his own opinion, I can openly disagree with him, and we can still be friends. That type of engagement is more rare in Silicon Valley than it is in other places in the country.
Part of it is that when there tends to be a high degree of ideological homogeneity, it starts feeling like 100% of people feel that way when it’s maybe closer to 80%. And the 20% who disagree no longer feel like they have the ability to speak up, because those in the 80% end up drowning you out. To be fair, I don’t believe that the majority of people on the [political] left in Silicon Valley are actually these kind of crazy, idea-slashing, militants but there is a very vocal minority of people who have a tendency to shout down all other opinions.
How much have Thiel’s personal political views affected the firm?
STEPHENS: He makes sure that his personal political views remain his own personal political views. They have never been forced upon us. The reason I was attracted to Founders Fund and only Founders Fund is that the team is super quirky and there are a lot of crazy opinions. It makes it a lot more interesting, and we’re allowing room for that debate to take place.
WHAT IS LYFT? Lyft and Uber are easy to understand but hard to value. A Bloomberg opinion column explains that Lyft and Uber are hard to value not only because they’re unlike existing public companies, but also because it’s not yet clear whether the business of facilitating rides at the tap of a smartphone is financially viable in every city. From the article:
Lyft and Uber can be widely popular and transportation-changing phenomenons but still might not be financially sustainable. Lyft and Uber are growing fast, but are those rates a capital-fueled mirage? I don’t know. Even if people keep riding and drivers keep driving, can the business be profitable? And how big is the market? I don’t know. Investors don’t know, either.
Any IPO is inherently a plunge into the unknown, but some unknowns are more unknowable than others. Lyft and especially Uber are the deepest darkest corner of unknown. Future public companies, including Airbnb and a growing variety of other young marketplace startups, will have similar unknowable unknowns.
• Motif Ingredients, a Boston-based food ingredients company, raised $90 million in Series A funding. Investors include Breakthrough Energy Ventures, Louis Dreyfus Company, Fonterra and Viking Global Investors.
• ThirdLove, a San Francisco-based bra and underwear brand, raised $55 million in funding. L. Catterton led the round, and was joined by investors including Allen & Company.
• Tessian, a London-based security platform helping reduce the chances of human security breaches, raised $42 million in Series B funding. Sequoia led the round, and was joined by investors including Latitude, Balderton Capital and Accel.
• Obsidian Security, a Newport Beach, Calif.-based cybersecurity company, raised $20 million in funding. Investors include Greylock Partners, Wing and GV.
• Botify, a Paris-based organic search marketing platform, raised $20 million in Series B funding. Idinvest Partners led the round, and was joined by investors including Ventech.
• Stellar Cyber, a security analytics provider, raised $13.2 million in Series A funding. Valley Capital Partners led the round, and was joined by investors including Northern Light Venture Capital and Digital Hearts.
• Landit, a New York-based tech platform focused on women’s career fulfillment, raised $13 million in Series A funding. WeWork led the round, and was joined by investors including New Enterprise Associates, Valo Ventures, Workday Ventures and Gingerbread Capital.
• Sendoso, a San Francisco-based company that helps users send gifts, notes and perishables via direct mail, raised $10.7 million in Series A funding. Craft Ventures led the round, and was joined by investors including Signia Partners, Storm Ventures, Struck Capital and Hack VC.
• Anitian, a Beaverton, Ore.-based cloud security and compliance automation company, raised $11 million in Series A funding. Investors include ForgePoint Capital.
• Threads, a work communication platform, raised $10.5 million in Series A funding. Sequoia led the round.
• Good Culture, a company that produces organic cottage cheese, raised $8 million in funding. CAVU Venture Partners led the round, and was joined by investors including 301 INC and Almanac Insights.
• ELSA, a mobile app that uses artificial intelligence and speech recognition technology to help language learners improve their English pronunciation, raised $7 million in Series A funding. Investors include Gradient Ventures, Monk’s Hill Ventures and SOSV.
• Two Chairs, a therapy startup offering a new model for mental health, raised $7 million in Series A funding from Maveron.
• Dray Alliance, a Los Angeles-based provider of on-demand drayage services for import and export shippers, raised $3.5 million in seed funding. Craft Ventures led the round.
• Mockingbird, a New York-based direct-to-consumer baby brand, raised $1.6 million in funding. FirstMark Capital led the round.
PRIVATE EQUITY DEALS
• Water Street Healthcare Partners made an investment in Pathnostics, an Irvine, Calif.-based diagnostic solutions company. Financial terms weren't disclosed.
FIRMS + FUNDS
• Scaleworks, a San Antonio, Texas-based venture capital firm, raised $80 million for its second fund.
• Anacapa Partners, a San Mateo, Calif.-based private equity firm, raised $79 million for its third fund, Anacapa Partners III LP.
• Susan Lin joined Felix Capital as a principal, and Sarah Shanfield joined as an associate.
• Jennifer Forster joined EPIQ Capital Group as a partner.
• P&M Corporate Finance LLC promoted Joe Wagner to managing director and partner.
• Quadrille Capital hired Edouard Brunet as vice president, Alejandra Duran Gil as a senior associate, Benoît Tesch as an associate, Vianney Barre as an associate, Augustin Palle as an analyst, and Guillaume Escolier as an analyst.
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Polina Marinova produces Term Sheet, and Lucinda Shen compiles the IPO news. Send deal announcements to Polina here and IPO news to Lucinda here.