Hedge fund hunk and billionaire investor Peter Thiel opened new venture capital firm, Mithril Capital Management
The billionaire hedge fund hunk and investor has opened a new venture capital firm, Mithril Capital Management, with a $402 million fund. While it’s unclear how much Mr. Thiel, who sold some $640 million worth of shares in Facebook’s I.P.O., contributed to the pot, he is the fund’s largest investor, according to a statement issued on Wednesday.
The firm, which is based in San Francisco, will fit somewhere between Mr. Thiel’s other investment firms, Founders Fund, which tends to focus on earlier stage investments, and Clarium Capital, a global macroeconomic hedge fund.
Mithril, led by Mr. Thiel and a former Clarium managing director, Ajay Royan, will seek “growth” opportunities — start-ups that have already raised some venture capital and are looking to ramp up significantly. According to Mr. Royan, the firm is looking globally but is not interested in pre-I.P.O. companies or companies on the verge of going public. He predicts Mithril’s average investment will be north of $20 million.
“We’re looking for inflection points,” Mr. Royan said. “We’re not looking for companies that are a done deal; we want companies that are about to hit a growth stage.”
Mr. Thiel, a co-founder of PayPal and Palantir, a data analytics company, is known for embracing markets like space exploration and biotechnology. And like Founders Fund, Mithril also plans to pursue start-ups that are tackling big problems.
“Mithril will play a patient, focused, and pivotal role in helping the world’s most outstanding creative minds solve vexing problems,”Mr. Thiel said in a statement.
By standing in the middle of the venture capital spectrum — between the early stage and pre-I.P.O. stage — Mr. Thiel and Mr. Royan are also making an interesting bet on the market. The early side has been flush with cash, thanks to a glut of new angel investors. The late stage, meanwhile, has benefited from the largesse of investors like Russian billionaire Yuri Milner and venture capital firms hoping to catch companies before they go public. But the middle of this barbell is thin on investors, creating an opportunity for firms like Mithril.
“Two years ago, we were watching what was happening in the Valley and beyond.” Mr. Royan said. “There is not enough capital in the intensive growth stage.”
Still, there are plenty of challenges in the market for Mr. Thiel’s new vehicle. Despite the softness in the public markets, valuations have been pretty high in the early-stage arena, which means Mithril may have to stomach even higher prices at the growth stage. Several days before the Facebook initial public offering, Viddy, a video mobile application, raised $30 million for its Series B round at a reported $370 million valuation. Mr. Royan says he is pretty confident the firm will be able to avoid the froth by steering clear of companies that are sitting in crowded areas.
Read More: Dealbook