This week on the Angel Chronicles series we're taking a look at the startup investment portfolio of one of the top Silicon Valley icons - Peter Thiel. He's well known for many things, such as co-founding PayPal, being the first outside investor in Facebook, founder of Founders Fund, Thiel Foundation, and author of Zero to One.
Peter was born in Germany and raised in America. He attended Stanford University, where he received both a Bachelor of Arts in Philosophy and a Juris Doctorate. He then became a lawyer, but quit after seven months due to a lack of transcendental significance in his job.
This led to his biggest ventures: PayPal, Palantir, and Founders Fund.
Thiel and several others co-founded Confinity in 1998 to process payments between Palm Pilots. The next year, it merged with Elon Musk's X.com to form PayPal, with Thiel serving as CEO and chairman until its acquisition by eBay which happened in 2002. His work on PayPal paved the way for the growth of e-commerce and digital payments.
Following PayPal, he co-founded Palantir Technologies in 2003, a data analytics firm specialising in software for government agencies and large corporations. Palantir is used to analyse and understand enormous amounts of data, and its customers include the CIA, the FBI, and the United States military. His work on Palantir aided improvement of government and corporate efficiency and effectiveness.
Thiel’s primary organization now, is Founders Fund, a venture capital firm that has invested in a number of successful startups, including Airbnb, SpaceX, and Lyft. Founders Fund is known for its contrarian views and its willingness to invest in unconventional ideas.
A large part of his $4.6 billion net worth comes from his early investments in some of the most successful startups in the world. He has made a total of 185 investments according to PitchBook.
Although we don't have the exact numbers of his exit profits, below are some of his most well known startup investments either as an angel investor or through Founders Fund.
Thiel joined Facebook's board of directors after making a $500,000 angel investment in the firm for a 10.2% stake in the company. This was Facebook's first outside investment, and it valued the firm at $4.9 million.
During Facebook's IPO in May 2012, Thiel sold his majority shares for $638 million. Later in August 2012, Thiel sold almost all of his remaining stake for $395.8 million, making it a total of more than $1 billion in that year.
He was an early investor in Stripe, a payment processing company with a focus on B2B transactions, that revolutionized the way businesses accept payments online. Founder’s Fund invested $6.5B in Stripe’s Series A round.
Founders Fund led a Series C funding round for Asana, a cloud-based project management software company. As part of the funding round, Asana raised $50 million from Founders Fund and other investors. He saw the potential for the software to transform the way people work. Asana was founded by Facebook co-founder Dustin Moskovitz and engineer Justin Rosenstein, who both worked on improving productivity at Facebook.
Thiel's investment in Asana helped the company to grow, and he sold a portion of his shares during the company's IPO in September 2020, earning a significant return on his investment.
eBay acquired PayPal for $1.5 billion in 2002, which was a significant exit for him. At the time of acquisition, his 3.7% stake in the company was worth $55 million.
Thiel was an early investor in Lyft through Founders Fund.. Lyft went public in 2019 at a valuation of $20.6 billion.
Yelp, a platform connecting users with businesses through crowd-sourced reviews, has doubled in market capitalization since its IPO in 2012. Thiel's early support as a funder contributed to its growth.
Zynga, a game developer specializing in social game services, received Thiel's angel investment in 2011. Since its IPO, Zynga has surpassed $11 billion in market capitalization.
Thiel was one of the earliest investors in Twilio, but sold the majrity of his stake in 2018. With a 67% return for investors in the past year, Twilio continues to thrive, aided by projected revenue growth and positive ratings.
He has a unique perspective on entrepreneurship and has offered a number of insights to aspiring entrepreneurs. His experience in itself is enough to take inspiration from. His 3 main viewpoints are:
Take contrarian views: He is known for his contrarian views and willingness to invest in unconventional ideas. Entrepreneurs need to think outside the box and pursue ideas that others may see as risky or unconventional.
Create monopolies: Most successful companies are those that create monopolies in their industries (read - Meta). Entrepreneurs should focus on creating products that are unique and that can't be easily replicated by competitors which gives an edge in the market.
Focus on sales: Sales are the key to success in business. Entrepreneurs should focus on selling their products and services and build a strong customer base. If a product doesn’t sell, everything else goes in vain.
Look for secrets: The best investment opportunities are those that are hidden from the mainstream and require a unique perspective to uncover.
Don't follow the crowd: Most investors simply follow trends and do what everyone else is doing, which leads to mediocre returns. Instead, seek for the opportunities that others have overlooked.
Take a long-term approach: The best investment returns are achieved by taking a long-term approach. Look for companies that have a clear path to long-term growth, even if they are not yet profitable or popular.
Focus on a few key investments: Investors should focus on a few key investments rather than spreading their money too thin. Investing in too many companies can dilute returns and make it difficult to stay informed about each investment.
Look for companies that are building monopolies: The most successful companies are those that are building monopolies. Invest in companies that are creating new markets or dominating existing ones.